Somers Re has FSR affirmed by AM Best

21-11-2022

Somers Re has FSR affirmed by AM Best

AM Best has affirmed the financial strength rating of A- (‘excellent’) and the long-term issuer credit ratings (ICRs) of a- (‘excellent’) of Somers Re (Bermuda) and its subsidiaries: Watford Insurance Company Europe Limited (Gibraltar); Watford Insurance Company (New Jersey); Watford Specialty Insurance Company (New Jersey); and Axeria IARD (France). In addition, AM Best has affirmed the long-term ICR of bbb- (‘good’) of Somers Group Holdings (Bermuda), the group’s holding company. The outlook of these ratings is stable.

The ratings reflect Somers’ balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Somers had the strongest level of risk-adjusted capitalisation, as measured by Best’s credit adequacy ratio, as of year-end 2021. The group’s capitalisation has been impacted by unrealised investment losses in 2022, but remains supportive of a very strong balance sheet strength assessment, AM Best said. The group’s five-year average operating returns have been volatile, it added, and it has experienced significant fluctuations in realised and unrealised gains and losses. However, Somers has been profitable in three of the past five years (2017-2021).

Somers has developed a global reinsurance and insurance platform. Business is primarily sourced and underwritten through contracts with Arch Capital Group and its entities, which also provides the core functions for the company’s underwriting operations. Historically, the group has focused on lower-volatility, medium- to long-tailed lines of business; however, more recently the group has diversified into more volatile short-tailed lines of business as well.

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