19 February 2019News

China Minsheng unit liquidity problems no issue for Sirius: AM Best

Bermuda-based re/insurance provider Sirius Group is unaffected by reported liquidity issues at its parent company, China Minsheng Investment Group (CMIG), according to AM Best.

CMIG, a Singapore-based investment holding company owned by private investors, is said to have missed a bond payment last week prompting concerns over its wider liquidity and the effect this could have on Sirius.

The ratings agency determined that Sirius is sufficiently independent of CMIG, and stressed that the re/insurer - with a financial strength rating of A - is sufficiently ringfenced from any problems at its parent.

AM Best added that Sirius’s listing on the Nasdaq in November 2018, and subsequent compliance with the Nasdaq listing requirements, strengthened its governance and improved its transparency, reinforcing its independence from its ultimate parent, CMIG. CMIG’s shareholding in Sirius was reduced, and Sirius promptly established a majority independent board of directors. Only one of six board directors represents CMIG.

The independence of the Sirius board of directors is protected by a shareholders’ agreement, valid until November 2021, AM Best noted. Furthermore, Sirius and its rated subsidiaries operate in jurisdictions considered to have strong regulatory oversight, notably Bermuda, Sweden, the US and the UK.

AM Best suggested these elements shield Sirius’s financial strength from any potential adverse parental influence, in particular the risk of capital extraction from the company.

CMIG's acquisition of Sirius Group was finalised in 2016 through its Bermuda holding company, CM Bermuda at a price of approximately $2.59 billion.