AM Best affirms Lion Re's 'A' rating

Bermuda-based Lion Reinsurance Company has had its financial strength rating of A (Excellent) affirmed by ratings agency AM Best. The outlook is stable.

Lion Re is a subsidiary of ASSA Compañía Tenedora and is owned ultimately by Grupo ASSA, a Central American insurance company which took over the insurance business of AIG in the region in 2015. 

Am Best said Lion Re is a Bermuda-based Class 3A reinsurer assuming risks from ASSA Tenedora affiliates for property, auto, liability, marine, group life (short-term), health and miscellaneous businesses. 

AM Best said it recognised the strategic role that Lion Re aimed to achieve in the group’s overall regional strategy; however, Lion Re’s business profile was considered limited given its accessibility to markets when compared with other commercial reinsurers.

The agency said Lion Re´s capital base was supportive of risk-adjusted capitalisation being assessed at the strongest level, as measured by Best’s capital adequacy ratio. Lion Re continues to perform an important role in ASSA Tenedora’s strategy as it consolidates operations in the Central America region by providing reinsurance capacity.

AM Best said: “Lion Re’s adequate level of operating performance results from its affiliated insurance companies in the Central America region, as well as its affiliation to Grupo ASSA, which provides synergies, operating efficiencies and guarantee support.

“The company reviews its underwriting guidelines consistently to improve the performance of its business segments that are deviating from targets. In 2023, the company’s consistent profitability was reflected in a 36 per cent return-on-equity ratio.”

The agency added: “Factors that could lead to positive rating actions include a greater degree of perceived integration of Lion Re’s role within the group while maintaining its guaranteed support of its parent.

Factors that could lead to negative rating actions include a material loss of capital that reduces risk-adjusted capitalisation to a level that does not support the ratings, or if the strategic importance of Lion Re to the group diminishes.”

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