KBRA affirms Premia’s financial strength rating
KBRA has affirmed the A insurance financial strength rating (IFSR) on Premia Reinsurance. KBRA has also affirmed the BBB+ issuer rating on Premia Holdings, as well as the BBB debt ratings on all of Premia Holdings’ subordinated notes. The Outlook for all ratings is stable.
The ratings reflect Premia’s ongoing successful execution of its run-off business strategy, KBRA said.
“Over the past five years, Premia has acquired more than $3 billion in gross loss reserves across several transactions, including the acquisition of insurance regulated entities in the US, UK, Belgium, Luxembourg and Lloyd’s of London (AA-/stable),” KBRA said.
“Through a combination of retained earnings and a manageable amount of additional debt, Premia Holdings’ capital grew to $829.3 million at end-2021, up 22.4% over prior year-end,” it added.
KBRA believes that both the group and the lead operating company maintain strong risk-based capitalisation with significant capacity to execute additional transactions over the medium term.
Premia Holdings’ financial leverage was 29.8% at end-2021, KBRA noted, adding that it expects the company to “prudently” source any additional debt capital to support planned growth.
“With fee income from Alan Gray LLC, the group’s claims management administrator, significant dividend capacity from Premia Re, the group’s lead operating company, and material interest expense savings from the refinancing of the company’s senior unsecured notes in May 2022, interest coverage on all outstanding debt is strong,” KBRA said, adding that it believes Premia operates under conservative risk tolerances and guidelines.
