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FOR IMMEDIATE RELEASE
MEXICO CITY - JULY 19, 2024 01:17 PM (EDT)
AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” (Excellent) of Lion Reinsurance Company Limited (Lion Re) (Bermuda). The outlook of these Credit Ratings (ratings) is stable.
Lion Re is a subsidiary of ASSA Compañía Tenedora, S.A. (ASSA Tenedora) and is owned ultimately by Grupo ASSA, S.A. (Grupo ASSA), a financial services holding company publicly traded on the Panama Stock Exchange.
The ratings reflect Lion Re´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.
Lion Re is a Bermuda-based reinsurer assuming risks from ASSA Tenedora affiliates for property, auto, liability, marine, group life (short term), health and miscellaneous businesses. AM Best recognizes the strategic role that Lion Re aims to achieve in the group’s overall regional strategy; however, Lion Re’s business profile is considered limited given its accessibility to markets when compared with other commercial reinsurers.
Lion Re´s capital base is supportive of risk-adjusted capitalization being assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Lion Re continues to perform an important role in ASSA Tenedora’s strategy as it consolidates operations in the Central America region by providing reinsurance capacity.
Lion Re’s adequate level of operating performance results from its affiliated insurance companies in the Central America region, as well as its affiliation to Grupo ASSA, which provides synergies, operating efficiencies and guarantee support. The company reviews its underwriting guidelines consistently to improve the performance of its business segments that are deviating from targets. Investment income, based on a conservative strategy, continues to support Lion Re’s results; however, the company is not dependent on this revenue to achieve positive bottom-line results. In 2023, the company’s consistent profitability was reflected in a 36% return-on-equity ratio.
Factors that could lead to positive rating actions include a greater degree of perceived integration of Lion Re’s role within the group while maintaining its guaranteed support of its parent. Factors that could lead to negative rating actions include a material loss of capital that reduces risk-adjusted capitalization to a level that does not support the ratings, or if the strategic importance of Lion Re to the group diminishes.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Jan. 18, 2024), 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 and Insurance Holding Company Analysis (Version Jan. 18, 2024)
· Catastrophe Analysis in AM Best Ratings (Feb. 8, 2024)
· Evaluating Country Risk (June 6, 2024)
· Scoring and Assessing Innovation (Feb. 27, 2023)
· Understanding Global BCAR (Version March 7, 2024)
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, relevant sources of information and the frequency for updating ratings, please refer to Guide to Best’s Credit Ratings.
· Previous Rating Date: June 16, 2023
· Initial Rating Date: Dec. 29, 2011
· Date Range of Financial Data Used: Dec. 31, 2018- Dec. 31, 2023
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