Best’s News & Research Service - December 21, 2023 10:07 AM (EST)
AM Best Affirms Credit Ratings of Somers Re Ltd. and Its Subsidiaries
- December 21, 2023 10:07 AM (EST)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) of Somers Re Ltd. (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 Ltd. (Somers) (Bermuda), the group’s holding company. The outlook of these Credit Ratings (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 a very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), as of year-end 2022. The group’s capitalization was impacted by unrealized investment losses in 2022 but remains supportive of a very strong balance sheet strength assessment. The group’s five-year average operating returns have been volatile, and it has experienced significant fluctuations in realized and unrealized gains and losses. However, Somers has been profitable in three of the past five years (2018-2022).
Somers has developed a global reinsurance and insurance platform. Business is sourced and underwritten primarily through contracts with Arch Capital Group Ltd. 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.
Negative rating actions could arise if Somers’ risk-adjusted capitalization were to deteriorate further beyond its current level or if the group’s liquidity was compromised. Additionally, rating actions could occur from a reversal in the group’s underwriting performance trend, which has seen declining combined ratios in recent years. Positive rating action could occur, though unlikely in the near term, if the group’s operating performance continues to trend in a positive direction and the group begins to produce significant underwriting profits.
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.