Best’s News & Research Service - July 15, 2022 11:04 AM (EDT)
AM Best Affirms Credit Ratings of StarStone Insurance Bermuda Limited and Its Subsidiary
- July 15, 2022 11:04 AM (EDT)
London //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of StarStone Insurance Bermuda Limited (SIBL) (Bermuda) and StarStone Insurance SE (SISE) (Liechtenstein). The outlook of these Credit Ratings (ratings) is stable.
The ratings of SIBL reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM). The ratings of SISE reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate ERM. Both companies’ ratings benefit from the support of their ultimate parent, Enstar Group Limited (Enstar), which has a track record of providing them with financial assistance and operational support.
Both companies ceased writing new business in July 2020, and SIBL has since disposed of its U.S. subsidiaries. SIBL bears the liabilities of business written prior to the disposal date of these companies through reinsurance agreements. A wholly owned subsidiary of SIBL also ceased its participation in Lloyd’s Syndicate 1301 at the end of 2020 but retains the liabilities of the business written during the 2020 and prior Lloyd’s underwriting years of account.
SIBL’s and SISE’s balance sheet strength assessments are underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), at year-end 31 December 2021. AM Best expects risk-adjusted capitalisation for both entities to remain at the strongest level over the medium term, based on their run-off plans.
SIBL’s balance sheet strength is supported by a relatively conservative investment portfolio and significant reinsurance protection that includes loss portfolio transfers (LPTs) provided by Enstar group entities. Although historical reserve volatility is an offsetting factor, the company has demonstrated positive reserve development on a gross and net basis in 2020, and on a gross basis in 2021 where a proportion of positive development was ceded to Enstar group affiliates through LPTs. SISE’s balance sheet strength is supported by a conservative investment portfolio and low underwriting leverage due to the high level of cessions to its parent company, SIBL.
The companies’ marginal operating performance assessments reflect their poor historical performance. Their limited business profile assessments consider their significantly reduced scale as a result of corporate disposals and the decision to cease writing new business.
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 specialising 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.