RenaissanceRe joint venture Top Layer Reinsurance Ltd. has had its "AA" financial strength rating affirmed by Standard & Poor's.

Top Layer, a Bermuda-based reinsurer of risk-remote property catastrophe exposure, is owned by State Farm Mutual Automobile Insurance Co. and RenaissanceRe.

S&P said the rating was affirmed based on the support of State Farm and RenaissanceRe company's parents and a $3.9 billion reinsurance contract.

Top Layer accepts exposure world-wide except in the US and windstorms in the Caribbean, S&P said.

It is responsible for the first $100 million of aggregate losses in any contract year (a calendar year) and is backed by a $3.9 billion aggregate excess-of-loss reinsurance contract from State Farm ($2.9 billion for first events and $1 billion for second events).

"Top Layer's exposure for its own account is supported by clean, irrevocable, secured letters of credit issued by a 'AA-' rated bank and by a shareholders' agreement between the joint venture partners," said Standard & Poor's credit analyst Charles Titterton. "If Top Layer becomes insolvent, the policyholders have a cut-through to State Farm - the right to claim directly on SFMA rather than Top Layer."

S&P noted that Top Layer, which was formed in 1999 and is managed by RenaissanceRe, has never incurred a loss.

"Although it is subject to very large individual risks, exposure is reportedly prudently managed by zones using sophisticated modelling and control techniques. SFMA's coverage is far in excess of any reasonably foreseeable combination of claims during a contract year."