Press Release - NOVEMBER 27, 2018
A.M. Best Assigns Credit Ratings to Starr Europe Insurance Limited
FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 27, 2018
The ratings reflect Starr Malta’s balance sheet strength, which A.M. Best categorises as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). The ratings also factor in explicit group support, in the form of a capital maintenance agreement, from Starr Insurance & Reinsurance Limited (SIRL), a subsidiary of Starr International Company, Inc.
Starr Malta enables the Starr International group to continue servicing policyholders across the European Economic Area (EEA) regardless of the terms of the United Kingdom’s exit from the European Union. The company received regulatory approval from the Malta Financial Services Authority (MFSA) on 16 October 2018. A.M. Best expects existing EEA business, currently underwritten by Starr International (Europe) Limited (SIEL), to be underwritten by Starr Malta in 2019.
Starr Malta has been provided with an initial capital injection of USD 50 million, ensuring prospective risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), allowing for the company’s planned premium growth. A.M. Best expects Starr Malta to maintain a conservative and liquid portfolio of good quality assets. An offsetting factor in the balance sheet strength assessment is the company’s projected high dependence on reinsurance, with a forecast cession of approximately 80% of premiums written.
A.M. Best expects Starr Malta’s prospective operating performance to be supportive of the adequate assessment. Earnings are projected to be underpinned by solid underwriting profits, boosted by reinsurance commission and modest investment income, reflecting a conservative investment portfolio. Technical performance is subject to potential volatility given the nature of risks underwritten.
Starr Malta’s business profile assessment takes into account its membership of the Starr International group, a global group providing property, casualty, and accident & health insurance products, as well as a range of specialty coverages including aviation, marine, energy and excess casualty insurance. Starr Malta will support the group’s strategy by offering clients in the EEA large gross line sizes, alongside reinsurance partners, in a range of property and casualty and specialty classes of business. Offsetting factors to the business profile assessment include business plan execution risk, given high levels of targeted new business growth, an elevated product risk profile, driven by exposure to higher-risk commercial specialty lines, and the competitive market conditions of the segments in which the company will operate. The projected business mix also has a degree of concentration by product line, although the underwriting portfolio will benefit from a good level of geographical diversification.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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