Enstar subsidiaries’ ratings affirmed
Enstar subsidiary StarStone Insurance Bermuda (SIBL) has had its A- financial strength rating affirmed by ratings agency AM Best.
AM Best also affirmed the A- FSR of Liechtenstein-based StarStone Insurance and said the outlook for both insurers, which are in run-off, was stable.
The ratings of SIBL and SISE reflect their balance sheet strength assessments, which AM Best evaluates as very strong, as well as their adequate operating performance, very limited business profile and appropriate enterprise risk management assessments.
“Both companies’ ratings benefit from the support of their ultimate parent, Enstar Group, which has a track record of providing these subsidiaries with financial assistance and operational support,” the ratings agency said.
It added that both companies ceased underwriting new business in July 2020, and SIBL has since disposed of its US subsidiaries and Lloyd’s operations. SIBL bears the liabilities of business written prior to the disposal date of these companies through reinsurance agreements, however, the liabilities related to the Lloyd’s operations, which were retained by SIBL, were transferred, through reinsurance to close into Bermuda-based Enstar’s Legacy Syndicate 2008 in 2023.
The agency said SIBL’s balance sheet strength is supported by a conservative investment portfolio and significant reinsurance protection that includes loss portfolio transfers (LPTs) provided by Enstar group entities.
The company has demonstrated positive reserve development since entering runoff, with a proportion of the positive reserve development being ceded to Enstar group affiliates through LPTs. SISE’s balance sheet strength is supported by a conservative investment portfolio and low net underwriting leverage due to its high cessions ceded to its parent company, SIBL.
The companies’ improved operating performance, partially through efficient claims management since entering runoff, is supportive of their adequate assessments. Their very limited business profile assessments consider their significantly reduced scales as a result of corporate disposals and the decision to cease writing new business, restricting prospective revenues.
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