New rating for Mozart, while North End Re affirmed
AM Best has assigned a credit rating to Mozart Insurance Ltd, giving it a financial strength rating of B++ (Good) and a long-term issuer credit rating of “bbb” (Good) with a stable outlook for the ratings.
Incorporated in Bermuda and registered as a Class 3A insurer in 2019, Mozart has a balance sheet that AM Best assesses as very strong, adequate operating performance, a limited business profile, and appropriate enterprise risk management.
The stable outlooks reflect Mozart’s ability to report profitable results, allowing its capital base to strengthen over time, AM Best states. “The adequate assessment of Mozart’s operating performance reflects the company’s ability to generate profitable results despite its recent creation,” it added.
Its rating could be boosted if it strengthens its capital base over time while maintaining its risk-adjusted capitalization through consistently retaining earnings. The erosion of the capital base from a deterioration in operating performance or significant cash withdrawals would result in a lower rating.
The agency has also affirmed North End Re’s financial strength rating of A- (Excellent) and long-term issuer credit rating of “a-” (Excellent), with a stable outlook. In its favour was its balance sheet strength, which AM Best assesses as strong, adequate operating performance, neutral business profile and appropriate enterprise risk management.
Despite a “favourable” risk-adjusted capitalization, Am Best noted its balance sheet volatility was likely to increase as more business is assumed in the latter half of 2024. High levels of competition and temporary realized investment losses caused by rising interest rates, which have negatively impacted earnings over the past two years, also tempered optimism.
“As operations ramp up, the company also is expected to utilize available internal and external revolving lines of credit to provide liquidity and maintain capital levels,” the agency’s note reads. To date, North End Re has closed one transaction in the third quarter of 2021, reinsuring $1.6 billion of fixed deferred annuities.
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