Rating agency AM Best has decided to remove StarStone Insurance Bermuda Limited (SIBL) (Bermuda) and StarStone Insurance SE (SISE) (Liechtenstein) from their under review with negative implications status.
At the same time, it affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) of the two units.
The outlook assigned to the Credit Ratings of both StarStone subsidiaries is stable.
AM Best said that its ratings of both SIBL and SISE reflect their balance sheet strength, which is considered to be very strong in both cases, as well as the businesses’ marginal operating performance, limited business profile and appropriate enterprise risk management (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.
The two businesses ceased writing new business in July 2020, and SIBL has since disposed of its U.S. subsidiaries and participation in Lloyd’s Syndicate 1301. SIBL bears the liabilities of business written prior to the disposal date of these companies through reinsurance agreements.
AM Best expects the risk-adjusted capitalisation of SIBL and SISE to remain at the strongest level in the medium term based on the consolidated run-off plan for these entities.
SIBL’s balance sheet strength is supported by a relatively conservative investment portfolio and significant reinsurance protection that includes loss portfolio transfers provided by Enstar group entities, analysts noted.
Although historical reserve volatility is an offsetting factor, the company’s current reserve position is considered more robust than in 2018 and 2019 and development patterns improved during 2020.
Meanwhile, SISE’s balance sheet strength is considered to be supported by a conservative investment portfolio and low underwriting leverage due to the high level of cessions to parent company SIBL.
