AM Best affirms Nectaris Re financial strength rating

AM Best has affirmed the financial strength rating of A (‘excellent’) of Nectaris Re, the operating subsidiary of Nectaris Holdings, which are both domiciled in Bermuda. The outlook of the ratings is stable.

The rating reflects Nectaris Re’s “strong” balance sheet, “adequate” operating performance, “limited” business profile and “appropriate” enterprise risk management, AM Best said.

Nectaris Re’s business strategy is to retrocede all of its business to Horseshoe Re II segregated accounts company with cells that are funded by insurance-linked securities funds managed by Leadenhall Capital Partners, a subsidiary of Mitsui Sumitomo Insurance Company, the rating agency said.

“The business written via both Lloyd’s Syndicate 2001 and MS Amlin AG, accounts for the majority of total limits ceded to Nectaris Re, and is 100% retroceded to Horseshoe Re II on a fully collateralised basis. Lloyd’s Syndicate 2001 and MS Amlin AG’s ceded business, is collaterised at the 1-in-1,000 aggregate exceedance probability (AEP) return period while retaining the associated tail risk,” it said.

“Nectaris also established a fronting relationship with Allianz Risk Transfer in 2022. Nectaris intends to increase its open market business to take advantage of the hard market with limited impact on its tail risk and capital. All open market business ceded to Horseshoe Re II is collateralised at the 1-in-2,000 AEP return period, with the associated tail risk retained by Nectaris Re. Collateral provided by Horseshoe Re II, which is comprised of cash and highly rated short-term assets, is held in trust accounts for the benefit of Nectaris Re.”

AM Best projects Nectaris Re’s risk-adjusted capital, as measured by Best’s Capital Adequacy Ratio, to remain at the strongest level over the near term, meaning one to three years.