Challenger Limited’s recently formed Calix Re Limited (Calix Re), a Class E licensed Bermuda reinsurance company, has been assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) by AM Best.
The majority of Calix Re’s business placed will be Japan-based fixed term annuities. It will utilise a long-standing reinsurance partnership for its initial book of business and future growth.
Calix Re’s initial capital will be provided by its parent company, Challenger Limited, and invested in various long-duration assets aligned with expected liabilities.
The outlook assigned to the credit ratings is stable. The ratings reflect Calix Re’s balance sheet strength, which AM Best assesses as very strong, alongside adequate operating performance, a limited business profile, and appropriate enterprise risk management (ERM).
AM Best expects Calix Re’s operating performance to remain at an adequate level, supported by the performance of a well-seasoned annuity block with low surrender experience that will be placed with it.
Break-even results are expected in the near term, with AM Best monitoring progress and any deviations from the five-year plan. Overall execution risk exists under the company’s five-year plan.
ERM is assessed as appropriate for Calix Re’s size and scale of operations. The programme largely relies on best practices and robust governance processes provided by the parent company. A full personnel plan is in place with resources scaled to match operations as it grows. AM Best will monitor the company’s risk management performance as it’s enacted and a track record becomes established.
