AM Best places Third Point Re rating under review with developing implications

Rating agency AM Best has placed Third Point Reinsurance’s ratings under review with developing implications.

AM Best said it had placed the Bermuda re/insurer’s financial strength rating of A- (excellent) under review, along with that of Third Point Reinsurance USA, following the announcement it will merge with Sirius International Insurance Group to form SiriusPoint.

AM Best noted the addition of the Sirius business is expected to add approximately $1.9 billion to Third Point Re’s $600 million in gross premium written. "The additional business not only adds size, which is expected to enhance Third Point Re’s market profile and add scale, but augments business diversification as Sirius has a larger global presence and has insurance operations in addition to its reinsurance platform.”

Third Point Re’s balance sheet strength is expected to remain strong despite the acquisition of Sirius, which maintains a higher level of financial and underwriting leverage and a significant amount of safety reserves moderating the fungibility of capital.

AM Best said risk-adjusted capital should benefit as Third Point Re’s already reduced concentration in alternative investments will be a significantly smaller portion of total invested assets of the combined entity. It expects that a significant majority share of investments will be composed of investment-grade, fixed-income securities and equities that will act as a portfolio ballast.

Dan Malloy, Chief Executive Officer of Third Point Re, welcomed the move, which he said recognised the re/insurer’s strategy of improving underwriting profitability.