AM Best affirms StarStone ratings

18-09-2017

AM Best has affirmed the financial strength rating of A- of StarStone Insurance Bermuda, StarStone Insurance, StarStone Insurance Europe, StarStone Specialty Insurance Company and StarStone National Insurance Company. StarStone was formerly known as Torus Insurance.

According to the rating agency since its launch in 2008, StarStone has built scale through a combination of acquisitions of businesses and teams, and organic growth. As a result, StarStone now writes a diversified specialist portfolio from operations in Bermuda, London, the US and Continental Europe.

StarStone has been owned by Enstar Group and the Trident Funds, managed by Stone Point Capital, since April 2014. AM Best views the support of Enstar and Stone Point as a positive rating factor, saying that the group’s owners provide strategic and operational support to StarStone, as well as financial assistance if needed. Both companies have a proven track record of building strong and profitable insurance businesses, Enstar primarily in insurance run-off and Stone Point in active underwriting.

AM Best stated that StarStone benefits from strong risk-adjusted capitalisation on a consolidated basis and at each rated operating company. StarStone Bermuda is the group holding company and operates as the carrier for most of the group’s underwriting risk through internal reinsurance contracts with the other StarStone entities. The owners are committed to maintaining StarStone’s risk-adjusted capitalisation at a level that is supportive of the ratings. In 2014, StarStone Bermuda entered into a loss portfolio transfer reinsurance agreement (LPT) with a cell of Fitzwilliam Insurance, an Enstar subsidiary domiciled in Bermuda. The LPT covers reserves for the group’s discontinued lines at 1 January 2014. In addition, StarStone Bermuda has entered into a 35 percent quota share reinsurance contract with KaylaRe, which is 48 percent owned by Enstar, effective from 1 January 2016. The resulting reduction in net written premiums and reserves enhanced the risk-adjusted capitalisation of the StarStone entities.

StarStone Bermuda reported underwriting profits in 2015 and 2016 after several years of losses. AM Best notes that the company’s underwriting performance in this period benefited from the LPT cover as the ceded reserves deteriorated. The company, supported by its owners, is committed to further improving financial performance. Nevertheless, achieving sustainable profitable results is likely to remain a challenge given the strong competition in its main business lines.

AM Best, StarStone, Rating, Bermuda, London, US, Europe

Bermuda Re