AM Best Information Services




AUGUST 05, 2022 12:32 PM (EDT)

AM Best Affirms Credit Ratings of Golden Tree Reinsurance Limited


CONTACTS:
 Salvador Smith
Senior Financial Analyst
+52 55 1102 2720, ext. 109
salvador.smith@ambest.com

Alfonso Novelo
Senior Director, Analytics
+52 55 1102 2720, ext. 107
alfonso.novelo@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jeff Mango
Managing Director, Strategy & Communications
+1 908 439 2200, ext. 5204
jeffrey.mango@ambest.com

FOR IMMEDIATE RELEASE

MEXICO CITY - AUGUST 05, 2022 12:32 PM (EDT)
AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Golden Tree Reinsurance Limited (Golden Tree) (Bermuda). The outlook of the Credit Ratings (ratings) is stable.

Golden Tree is a subsidiary of Iris Financial Services Limited (Iris Financial) and is owned ultimately by Springbrook Capital Ltd., a privately held holding company with diversified operations in insurance and financial services.

The ratings reflect Golden Tree’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

Golden Tree was established initially in 2015 as a segregated portfolio company. In 2019, the company was licensed as a Class 3A insurer under Bermuda laws to provide reinsurance capacity for commercial credit and credit life risks as part of the group’s retrocession cover, with geographic exposure to Colombia’s insurance market.

The ratings also reflect Golden Tree’s very strong balance sheet assessment, sound operating performance and its affiliation to Iris Financial, which provides synergies and operating efficiencies, as well as an appropriate ERM framework. Offsetting these positive rating factors are the company’s concentration in one business line and the strong competitive environment in its target geographic market of Colombia.

Golden Tree’s very strong balance sheet is underpinned by capital base that was enhanced in 2021, in conjunction with the company’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Golden Tree’s capital base has strengthened over time as a result of its sound underwriting practices. In 2021, the company continued to sustain profitability mainly through underwriting, enabling it to generate a return on equity of 39%. AM Best expects Golden Tree to continue having an important role in its group’s strategy while starting to provide reinsurance capacity to third-party commercial insurers. This comes amid healthy growth prospects for the company and consistent profitability generated by new business from group´s recently launched proprietary managing general agent (MGA). Investment income, driven by a diversified strategy, has continued to support Golden Tree’s results further; however, the company is not dependent on this revenue to achieve positive bottom-line results.

Factors that could lead to a rating upgrade for Golden Tree include sustained capital growth, increased business diversification and consistent operating performance. Factors that could lead to negative rating action include a material loss of capital, either from a substantial decline in profitability, due to new business volatility or execution risk, or an aggressive dividend policy, which reduces risk-adjusted capitalization to a level that no longer supports Golden Tree’s ratings.

The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Nov. 13, 2020), which provides a comprehensive explanation of AM Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:


  • Available Capital & Holding Company Analysis (Version Oct. 13, 2017)

  • Evaluating Country Risk (Version Oct. 13, 2017)

  • Scoring and Assessing Innovation (Version March 5, 2020)

  • Understanding Global BCAR (Version June 30, 2022)

View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to Guide to Best’s Credit Ratings.


  • Previous Rating Date: July 9, 2021

  • Date Range of Financial Data Used: Dec. 31, 2017- Dec. 31, 2021

This press release relates to rating(s) that have been published on AM Best’s website. For additional 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.

AM Best does not validate or certify the information provided by the client in order to issue a credit rating.

While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. AM Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.

AM Best’s credit ratings are independent and objective opinions, not statements of fact. AM Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. AM Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

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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.


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AMB# Company Name
071979 Golden Tree Reinsurance Limited