KBRA assigns A- rating to life reinsurer

Ratings agency KBRA has assigned life reinsurer AeBe ISA an A- insurance financial strength rating and a stable outlook. 

AeBe, which has $4.4 billion in assets, is an incorporated segregated account (ISA) of Agam Bermuda ISAC sponsored by 26North Partners, a multi-asset class investment platform founded and led by Josh Harris, with approximately $13 billion in assets under management. 

KBRA said the company has a very strong risk-based capitalisation, seasoned management team, strong enterprise risk management framework and sound management of the company’s exposure to interest rate risk. 

KBRA said the ISAC structure provides a robust corporate framework as well as operational flexibility to AeBe as the company onboards future business. 

“At end-2022, AeBe’s Bermuda Solvency Capital Requirement ratio was 541%,” the agency said. “As AeBe executes its business plan, KBRA expects this ratio to decrease but remain strong over the medium term. AeBe benefits from an experienced management team with deep expertise in reinsurance, asset management, and the Bermuda market. 

“As a reinsurer of asset intensive life and annuity liabilities, AeBe is exposed to interest rate risk that can cause spread compression or disintermediation depending on rising/falling rates.”

KBRA noted that due to its limited tenure in the market, AeBe’s earnings are currently dependent on a small number of transactions but expected earnings diversification will improve. 

“While management has a track record of building successful businesses as well as investing insurance company assets, KBRA believes that AeBe still faces execution risk. KBRA views AeBe’s business plan as conservative but notes that the annuity reinsurance market is dominated by a few large competitors that benefit from scale and brand recognition as well as several newer entrants, both of which may challenge AeBe’s ability to execute its business plan.”