AM Best assigns ratings to Sirius Bermuda
AM Best has assigned a financial strength rating (FSR) of A (Excellent) to Sirius Bermuda Insurance Company, a subsidiary of Sirius Group.
The outlook assigned to the FSR is negative. Concurrently, AM Best has affirmed the FSR of A (Excellent) of Sweden-based Sirius International Insurance Corporation and its subsidiary in New York, Sirius America Insurance Company.
Sirius Bermuda will assume a quota share from Sirius International, effective July 2016. AM Best expects this to result in approximately $65 million of net written premiums for the year.
In 2017, Sirius Bermuda will additionally assume other intercompany business, bringing its total net written premium to approximately $500 million.
According to AM Best, the business written by Sirius International and Sirius America has historically been of good quality and prospectively, and it expects Sirius Bermuda to produce solid underwriting results.
Sirius Bermuda’s risk-adjusted capitalisation is also anticipated to remain strong, supported by a planned capital reallocation from other group members and good earnings retention.
AM Best’s affirmation of the ratings of Sirius Group and its subsidiaries reflects its expectation that their financial strength will remain strong following the group reorganisation.
While less business will be retained by Sirius America and Sirius International, both companies are expected to maintain strong levels of risk-adjusted capitalisation and good earnings generation. The restructuring enables the Sirius Group to be more flexible and generate efficiencies.
AM Best’s negative outlooks reflect its ongoing concern that the financial strength of the Sirius Group and its subsidiaries may deteriorate over time following its acquisition by China Minsheng Investment (CMI), a private investment holding company that has interests in energy, aviation and real estate, in addition to insurance.
AM Best views the credit profile of CMI as materially weaker than that of Sirius Group.
It expects Sirius Group to demonstrate an increased level of independence from CMI over the short term; failure to do so is likely to result in a negative rating action.
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