AM Best has assigned a Financial Strength Rating (FSR) of A-(Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) to Sutton Life Re Ltd. (Sutton Life Re) (Hamilton, Bermuda).
The ratings, which both have a stable outlook, reflect Sutton Life Re’s 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.
Sutton Life Re is a recently established Bermuda reinsurer affiliated with Sixth Street Partners, LCC, a global investment firm that has committed significant capital into the life/annuity insurance space over the past year.
Back in December, Allianz Life Insurance Company of North America announced reinsurance agreements with Resolution Life Group Holdings LP and Talcott Resolution Life Insurance Company (Talcott), the latter of which is affiliated with Sixth Street and Sutton Life Re.
Under the terms of the transaction, approximately $20 billion of fixed-indexed annuity liabilities were placed with Talcott and Sutton Life Re.
The transaction formally closed at year-end 2021, resulting in Talcott and Sutton Life Re managing $111 billion in liabilities and surplus.
AM Best evaluated Sutton Life Re’s balance sheet and projected operating results, and concluded that the entity has a very strong balance sheet with expected adequate operating performance.
The rating agency notes that the company’s balance sheet benefits from relatively conservative initial investment allocations.
Furthermore, it anticipates that Sutton Life Re will utilize resources and already established policies and procedures from Talcott for investment management and for its enterprise risk management framework.
AM Best also believes that Sutton Life Re will engage in future transaction activity as it executes its strategy of engaging in reinsurance flow transactions and block acquisitions.
