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A.M. Best turns negative on Sirius International

22nd November 2019 - Author: Luke Gallin

Global financial services ratings agency, A.M. Best, has revised its outlooks to negative from stable for Sirius International Insurance Group, Ltd. and its main rated subsidiaries, citing the deterioration of the firm’s operating performance metrics since 2017.

Sirius_logga_Group_flatSpecifically, A.M. Best has revised the outlooks to negative and affirmed the Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Rating (Long-Term ICR) of “a” of Sirius Bermuda Insurance Company Ltd., Sirius International Insurance Corporation, and its subsidiary Sirius America Insurance Company.

At the same time, the ratings agency has revised the outlooks to negative from stable and affirmed the Long-Term ICR of “bbb” of Sirius International Insurance Group, Ltd., and Sirius International Group, Ltd.

A.M. Best explains that the revision to negative is a reflection of deteriorating operating performance metrics that have impacted the firm since 2017, which is mostly a result of above-average catastrophe events.

“Additionally, the recently reported debt and liquidity issues of SIIG’s ultimate parent company, China Minsheng Investment Group Corp., Ltd. (CMIG), together with its lack of financial transparency, have the potential to lead to increasing pressure on the safeguard mechanisms SIIG has put in place since its listing on the Nasdaq in 2018 to protect its financial strength from the significantly lower credit quality of CMIG,” explains the ratings agency.

A.M. Best adds that the ratings reflect the firm’s consolidated balance sheet strength, which is very strong, along with its strong operating performance, neutral business profile and appropriate enterprise risk management.

“Despite an increasingly difficult operating environment, SIIG maintains a good position in its core markets, as an established midsized (re)insurer that leads or co-leads over half of its reinsurance business. SIIG’s business mix is well-diversified, with some geographical bias toward North America.

“Prospectively, AM Best expects the group to continue to enhance its profile and rebalance its underwriting portfolio by cautiously growing its A&H and selected specialty and casualty lines,” explains A.M. Best.

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