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16 January 2023News

AM Best revises Canopius Re outlook to negative

AM Best has revised the outlook of Canopius Re’s A- financial strength rating to negative from stable on pressures on its balance sheet strength.

Its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), decreased to the strong level from the very strong level as at year-end 2021 and is expected to have remained at the strong level through 2022.

It also noted that Canopius’ risk-adjusted capitalisation is expected to improve significantly in the near term, which would alleviate the negative pressure on the ratings. A negative rating action is likely if this does not occur.

AM Best has affirmed the rating based on noting that its balance sheet remains strong, also noting its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Canopius’ underwriting results showed a moderate recovery in 2021, after underperformance during the period 2017-2020. AM Best expects the group to report a further improvement in underwriting performance for 2022, although overall results will likely be impacted adversely by unrealised fair value losses on fixed income investments. Prospectively, AM Best expects operating performance under the new leadership team to continue to benefit from actions taken to reduce exposure to natural catastrophe events, a strong rating environment and from better yields on the group’s investment portfolio due to the higher interest rate environment.




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More on this story

article
28 September 2022   New hire was head of ESG and climate change at WTW.
article
3 October 2022   The appointee was business transformation leader at QBE and commercial operations executive at AIG.
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2 March 2023   The rating agency will also examine a number of pertinent topics.