AM Best takes StarStone Insurance Bermuda and Liechtenstein off negative review
AM Best has removed StarStone Insurance Bermuda and StarStone Insurance Liechtenstein from under review with negative implications and affirmed their financial strength ratings (FSR) of A- (excellent) with a stable outlook.
AM Best said both StarStone entities have very strong balance sheets. They both have marginal operating performance, limited business profile and appropriate enterprise risk management (ERM), it said.
Both companies’ ratings benefit from the support of their ultimate parent, Enstar Group, which has a track record of providing them with financial assistance and operational support.
Both companies ceased writing new business in July 2020. The Liechtenstein operation has since disposed of its US subsidiaries and participation in Lloyd’s Syndicate 1301, and bears the liabilities of business written prior to the disposal date of these companies through reinsurance agreements.
AM Best expects the risk-adjusted capitalisation of both entities to remain at the strongest level in the medium term, based on the consolidated run-off plan for these entities.
StarStone Insurance Bermuda’s balance sheet strength is supported by a relatively conservative investment portfolio and significant reinsurance protection that includes loss portfolio transfers provided by Enstar group entities. Although historical reserve volatility is an offsetting factor, the company’s current reserve position is considered more robust than in 2018 and 2019 and development patterns improved during 2020. AM Best expects any further disposals of subsidiaries to be immaterial to StarStone Insurance Bermuda’s risk-adjusted capitalisation.
StarStone Insurance Liechtenstein’s balance sheet strength is supported by a conservative investment portfolio and low underwriting leverage due to the high level of cessions to parent company SIBL.
The companies’ marginal operating performance assessments reflect their poor historical performance. Their limited business profile assessments consider their significantly reduced scale as a result of corporate disposals and the decision to cease writing new business.