MARCH 04, 2020 10:46 AM (EST)
AM Best Downgrades Credit Ratings of Sirius International Insurance Group, Ltd. and Main Rated Subsidiaries
|Jessica Botelho-Young, CA|
Senior Financial Analyst
+44 20 7397 0310
Ghislain Le Cam, CFA, FRM
+44 20 7397 0268
Manager, Public Relations
+1 908 439 2200, ext. 5159
Director, Public Relations
+1 908 439 2200, ext. 5644
FOR IMMEDIATE RELEASE
LONDON - MARCH 04, 2020 10:46 AM (EST)
AM Best has downgraded the Financial Strength Ratings (FSR) to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a-” from “a” of Sirius Bermuda Insurance Company Ltd. (Sirius Bermuda) (Bermuda), Sirius International Insurance Corporation (publ) (Sirius International) (Sweden), and its subsidiary Sirius America Insurance Company (Sirius America) (USA). Additionally, AM Best has downgraded the Long-Term ICR to “bbb-” from “bbb” of Sirius International Insurance Group, Ltd. (SIIG) (Bermuda) [NASDAQ: SG], and Sirius International Group, Ltd. (SIG) (Bermuda), both non-operating holding companies. Concurrently, AM Best has placed these Credit Ratings (ratings) under review with negative implications.
The ratings reflect SIIG’s consolidated balance sheet strength, which AM Best categorises as very strong, as well as the group’s strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings of Sirius Bermuda, Sirius International and Sirius America factor in their strategic importance to SIIG.
The rating actions follow the execution of a written resolution on 25 February 2020 by CM Bermuda Ltd. (CM Bermuda), a wholly owned subsidiary of China Minsheng Investment Group Corp., Ltd. (CMIG) and SIIG’s controlling shareholder, which may prohibit SIIG’s Board of Directors from issuing any shares and taking certain other actions with respect to the shares without the prior approval of holders of the common shares of SIIG representing at least 75% of the shareholder voting rights (CM Bermuda has 87% of the shareholder voting rights).
The rating downgrades reflect the negative impact on the rating fundamentals of SIIG from its association with CMIG. In AM Best’s view, this recent development has the potential to affect the company’s business profile adversely and is a strain on management’s time and resources at a time when the company needs to address deterioration in its operating performance.
In addition, the ratings have been placed under review with negative implications as AM Best needs to assess whether the safeguard mechanisms that SIIG has had in place, since its listing on the Nasdaq in 2018, are sufficiently strong to protect the independence of its operations from CMIG. AM Best considers the resolution executed by CM Bermuda as a sign that CMIG could exert control over SIIG’s operations via CM Bermuda, despite the presence of solid governance arrangements. The credit quality of CMIG is significantly weaker than that of SIIG.
AM Best will continue to engage with SIIG’s management and monitor closely any developments in the relationship between SIIG and CMIG, as well as the impact that these developments may have on SIIG’s financial strength.
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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.