Convex Group gets rating upgrade

Bermuda-based Convex Group has received a boost from ratings agency AM Best, which has upgraded the financial strength ratings of its subsidiaries to A (Excellent) from A- (Excellent).

The outlook has been revised from positive to stable following the upgrade.

AM Best said the upgrade reflected Convex’s improved business profile assessment, supported by continued enhancement of its product diversification, scale and profitability.

The agency said: "Convex has demonstrated excellent market acceptance since its inception, exceeding $3 billion of consolidated gross written premium in 2022, its third full year of operation. Further profitable growth is expected by AM Best over the medium term."

Convex was founded by London and Bermuda insurance legend Stephen Catlin and Paul Brand in 2019.

AM Best added that Convex’s risk-adjusted capitalisation was comfortably at the strongest level at year-end 2022 and noted that net required capital was expected to increase over the medium term as the group continued to grow its underwriting portfolio.

The agency said the group’s balance sheet strength was supported by a conservative investment portfolio and good financial flexibility but warned that Convex had a material exposure to catastrophe risk and its dependence on reinsurance to manage the risk. However, it said this was partially mitigated by a reinsurance panel of "excellent credit quality".

It added: "Since inception, the group has demonstrated consistently improving underwriting results, with 2022 representing Convex’s first full year of underwriting profitability, evidenced by a 98% combined ratio.

"AM Best expects Convex’s underwriting performance to improve as its book of business gains further scale and diversification. The likelihood of the group’s successful execution of its business plan is enhanced by the strong record of senior management and underwriters that have extensive experience in the (re)insurance industry."