Bermuda life reinsurer Athora Re receives AM Best rating

Ratings agency AM Best has assigned a financial strength rating of B++ (Good) to Bermuda-based life reinsurer Athora Re.

The ratings reflect Athora Re's balance sheet strength, which is categorised as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Concurrently, Athora Re's subsidiary Athora Ireland has received a B++ rating. Athora Re and Athora Ireland are expected to provide third party and intra-group reinsurance, which are core features of Athora Holding's business plans. Athora Holding provides acquisition and reinsurance solutions to European life insurers.

Athora Re’s risk-adjusted capitalisation is projected to be maintained at the very strong level, as measured by the Best’s Capital Adequacy Ratio (BCAR).

Both Athora Re and Athora Ireland benefit from the financial flexibility of Athora, supported by circa €1.5 billion of undrawn, committed and irrevocable capital from its shareholders. The companies also benefit from Athora’s long-term relationships with its strategic shareholders (Athene Holding and Apollo), Athora’s access to Apollo’s asset management expertise, and an experienced management team.

An offsetting rating factor is Athora’s elevated level of investment risk associated with the ambitious targeted investment returns. The ratings agency views the investment risk to the group as related primarily to default experience rather than spread variability in light of the targeted low duration gap. A scenario of rising interest rates may increase risk in this respect, AM Best said.

Athora Re and Athora Ireland’s business profiles cover external reinsurance and intra group reinsurance. Both companies will typically focus on non-participating reinsurance structures. The use of intra group reinsurance is an essential component of Athora’s business plans, which enables the centralisation of liabilities to assist with capital optimisation within the group, and provides access to the Bermuda operating environment.