Rating agency AM Best has removed the under review with negative implications status from Canopius US Insurance, Inc. and Canopius Reinsurance AG.
At the same time AM Best has affirmed the Financial Strength Ratings of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of both Canopius Group subsidiaries, and assigned them a stable outlook.
The removal of the under review status comes after Canopius announced it had entered into a strategic partnership with Samsung Fire & Marine Insurance Co., Ltd. (SFMI) and completed the merger of AmTrust at Lloyd’s business.
AM Best originally placed the Canopius units under review in March 2019 on the expectation that they would produce significantly lower consolidated year-end 2018 risk-adjusted capitalisation than previously anticipated, driven by “worse-than-expected operating results for that year.”
The current ratings reflect Canopius’ strong balance sheet strength, as well as its adequate operating performance, neutral business profile, and appropriate enterprise risk management, analysts explained.
The company’s balance sheet strength is underpinned by risk-adjusted capital that AM Best expects to be maintained at a very strong level in the medium terms, supported by contributions from SFMI and AmTrust.
Additionally, Canopius’ balance sheet strength is likely to be supported by its move toward a more conservative investment allocation and a reduction in catastrophe exposure over 2018 and 2019, AM Best said.
Canopius’ operating performance in 2018 and 2017 was affected negatively by catastrophe losses, resulting from its relatively high-risk appetite in the past.
For the first half of 2019, whilst the overall results were positive, the group reported an underwriting loss due to deterioration of Hurricane Jebi claims and modest reserve strengthening in other areas.