ASR Re, the newly launched Bermuda subsidiary of pan-African reinsurer Africa Specialty Risks (ASR), has been assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” (Good) by AM Best.
The ratings, which both have a stable outlook, reflect ASR’s consolidated balance sheet str
ength, which AM Best assesses as very strong, as well as the group’s adequate operating performance, limited business profile and appropriate enterprise risk management.
In addition, AM Best notes that its ratings reflect the strategic importance of ASR Re to the ASR group, given that it will be the principal contributor of premium income.
In addition to writing third-party reinsurance, ASR Re will provide reinsurance protection to its subsidiary Africa Specialty Risks Reinsurer (Mauritius).
The group has been capitalised initially with $20 million of common shareholders’ equity, drawn from a $50 million facility managed by Helios Investment Partners, a private equity investor and manager with a track record of investing in companies with an African focus.
ASR is expected to maintain the strongest level of consolidated risk-adjusted capitalisation, although an offsetting factor in AM Best’s balance sheet strength assessment is the small absolute size of ASR’s capital and surplus, by international standards.
In addition, ASR is exposed to the high levels of economic, political and financial system risks that are associated with its target operating environment in the African specialty reinsurance market.
But these facts are offset somewhat by the good credit quality of its retrocession panel and its small net line size, as well as robust risk management practices, good geographic diversification and a strategy to primarily reinsure assets of developed market corporates that have an African touchpoint.
