Aspida Life Re's A- financial strength rating affirmed

Bermuda-based Aspida Life Re has had its financial strength rating of A- affirmed by AM Best, but the ratings agency has noted that its group's exposure to less liquid investments is higher than the industry average. The outlook is stable. 

Aspida Life Re is part of the Aspida Group with North Carolina-based Aspida Life Insurance Company. The group is owned by alternative investment manager Ares Management and third party investors.   

AM Best said the Aspida Group will continue to benefit for the foreseeable future from significant capital infusions and financial resources of Ares and other investors.

"Aspida Group had profitable adjusted operating income in 2023 and expects to continue to grow its operating income steadily driven by notable premium growth in both of its operating entities for the foreseeable future," AM Best said. "Ares Insurance Solutions (AIS), a resource of Ares dedicated to Aspida Group, has repositioned and deployed assets, focusing on structured credit to increase interest rate spread and yield. 

"While AM Best acknowledges the favourable track record and extensive investment experience, exposure to less liquid investments in Aspida Group’s general accounts are somewhat elevated compared with industry averages. Over the longer term, AM Best expects that Aspida Group will demonstrate increasing returns on capital."

It added: "In its neutral business profile assessment of Aspida Group, AM Best recognizes that both main operating entities are driving growth through their respective business plans and that Aspida Group is building a recognizable brand. Aspida Group does remain concentrated in interest-sensitive annuities, which currently account for all of its business."

The agency said the ratings reflected Aspida Group’s balance sheet strength, which AM Best assessed as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

"The stable outlooks reflect the expectation that Aspida Group will maintain the strength of their balance sheet and overall liquidity sources with support from Ares Management Corporation (Ares) and third-party investors as it executes its business strategy of reinsurance growth through block acquisitions and flow reinsurance treaties and retail growth through expanding its distribution partners and its competitive annuity product suite. The outlooks also reflect the maintenance of an appropriate enterprise risk management framework. Operating trends are expected to remain positive over the near to medium term as management continues to focus on interest rate spread management."

It said: As with any newer organization, Aspida Group face execution risks, which are magnified by the increasing competitive annuity market environment. AM Best will continue to monitor their ability to execute on their current business plans without any material adverse deviation from expected levels of capitalization levels and earnings."

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