AM Best Downgrades Credit Ratings of 777 Re. Ltd.; Places Credit Ratings Under Review With Negative Implications
- November 08, 2023 02:47 PM (EST)
Oldwick //BestWire// - AM Best has downgraded the Financial Strength Rating to B (Fair) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bb” (Fair) from “a-” (Excellent) of 777 Re. Ltd. (Hamilton, Bermuda). Concurrently AM Best has placed these Credit Ratings (ratings) under review with negative implications.
The ratings reflect 777 Re. Ltd.’s balance sheet strength, which AM Best assesses as weak, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management (ERM).
The rating downgrades reflect the revision of 777 Re. Ltd.’s balance sheet strength assessment to weak from very strong, driven by the material decline in the company’s risk-adjusted capital ratio, as measured by Best’s Capital Adequacy Ratio (BCAR). This resulted from the company’s significant exposure to investments in various 777 Partners LLC originated assets resulting in higher risk charges. These concerns are heightened by uncertainty regarding the financial condition of 777 Partners LLC as it has not provided audited financial statements for the past two years.
The rating downgrades also reflect the revision of 777 Re. Ltd.’s ERM assessment to marginal from appropriate, reflecting AM Best’s concern regarding the governance and risk management practices that led to the significant investment in affiliated assets.
The company has been placed under review with negative implications pending the completion of its plans to improve risk-adjusted capitalization materially by divesting the majority of its affiliated holdings.
Additional negative rating actions could occur if the company is unable to execute on its plan to improve risk-adjusted capitalization materially, if the quality of capital or assets deteriorates further, or if the company’s execution of its business plan leads to a deterioration in its prospective operating performance.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.