Citadel $35m boost for subsidiaries
Citadel Risk’s subsidiaries, including its Bermuda reinsurance business, are to benefit from a $35 million cash injection, the company has announced.
The company is to use $10 million to boost the balance sheet of its US managing general agent American Millennium Insurance Company (AMIC). The MGA was downgraded by AM Best in February to C- from C++ following heavy losses on historic business written in Texas between 2016 and 2018.
A further $25m, however, is also being injected into Citadel’s balance sheet, which stood at $47.1 million at the end of April. Its reinsurance unit was also downgraded in February to B from B++.
Tony Weller, group chief executive officer of Citadel Risk, said: “This follows some of the difficulties we had last year. While our reinsurance results were satisfactory, two of the MGAs we backed in Texas suffered some bad losses from historic business. We had some bad luck, but the controls were not as good as they should have been.
“This move draws a line under all that. It secures our credibility with stakeholders and reassures regulators, brokers and rating agencies—it makes it easier for all our counterparties.
The injection almost triples the company’s surplus capital from $20 million to $55 million and gives it a much better solvency ratio, he added.