Wilton Re’s A rating affirmed by AM Best
Bermuda long term re/insurer Wilton Re’s A+ financial strength rating has been affirmed by ratings agency AM Best after it completed the addition of a block of secondary guaranteed life insurance this week.
However, AM Best kept Canadian subsidiary ivari’s A rating under review with negative implications, saying it is rating it separately as it is due to be sold to Sagicor.
AM Best assessed Wilton Re’s balance sheet strength as very strong along with its strong operating performance, favourable business profile and appropriate enterprise risk management.
“Wilton Re has exhibited very strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, over the medium term as it has navigated through a few large reinsurance transactions in prior periods and currently added a block of secondary guaranteed universal life from Transamerica Life Insurance Company, which closed on August 30, 2023,” AM Best said.
“Its capital and surplus also is affected by its ongoing transaction to sell its Canada business, ivari,” the agency said. “Given the pending sale, ivari is rated on a standalone basis with nominal impact to the company's risk-adjusted capital.
“There are other attributes contributing to the assessment, which include a solid liquidity and financial flexibility position through its membership of the Federal Home Loan Bank and access to capital through its ultimate parent, Canada Pension Plan Investment Board. The company does have some elements of a duration mismatch in certain US subsidiaries; however, there are mitigation plans to close this gap.”
AM Best said its operating earnings were favourable over the medium term and had been improved by new treaties, where premiums had “improved dramatically through large transactions such as its agreement whereby The Allstate Corporation sold Allstate Life Insurance Company of NY to Wilton Re”.
“The statutory net gains in 2022 were $594.3 million for the group, where the results in 2021 were reported as a loss of $652.4 million. These swings are recognised by AM Best as transactional and each deal brings a different set of risks.
AM Best also acknowledged that Wilton Re, eahded by chief executive Sylvia Oliviera, has a mature ERM programme in which it leans upon to determine how well its deal structures fit with the organization’s risk tolerances.
“From a business perspective Wilton Re is an active participant in the reinsurance market actively bidding on opportunities in life, annuity and structured settlements. Each of these opportunities is presented to various stakeholders to assess the material risks that may impact the organisation negatively. Therefore, the company has been selective in choosing profitable reinsurance agreements.”
