Sirius downgraded amid concerns about negative shareholder influence

05-03-2020

Sirius Bermuda Insurance Company’s financial strength rating has been downgraded by AM Best, to A- (Excellent) from A (Excellent). 

Subsidiaries Sirius International Insurance Corporation and Sirius America Insurance Company were also downgraded. 

The action comes after CM Bermuda, a wholly owned subsidiary of China Minsheng Investment Group (CMIG) and controlling shareholder of Sirius International Insurance Group (SIIG), moved to restrict SIIG’s ability to raise capital. 

On 25 February, 2020, CM Bermuda executed a written resolution that could prohibit SIIG’s board of directors from issuing  shares without approval from 75 percent of its shareholders with voting rights. CM Bermuda has 87 percent of the shareholder voting rights.

AM Best said in a note: “The rating downgrades reflect the negative impact on the rating fundamentals of SIIG from its association with CMIG. In AM Best’s view, this recent development has the potential to affect the company’s business profile adversely and is a strain on management’s time and resources at a time when the company needs to address deterioration in its operating performance.”

The rating agency said it was unclear whether SIIG had the necessary safeguard mechanisms in place to protect the independence of its operations from CMIG. 

“AM Best considers the resolution executed by CM Bermuda as a sign that CMIG could exert control over SIIG’s operations via CM Bermuda, despite the presence of solid governance arrangements,” AM Best said. 

Sirius Bermuda Insurance Company, Sirius International Insurance Group, AM Best, China Minsheng Investment Group, CM Bermuda

Bermuda Re