AM Best has downgraded 777 Re’s, the Bermuda-based reinsurance entity of investment firm 777 Partners, credit ratings and maintained its under review with negative implications status.
The company offers reinsurance on active and run-off blocks of life insurance and annuity business.
777 Re’s Financial Strength Rating has been downgraded to C- (Weak) from B (Fair) and the Long-Term Issuer Credit Rating to “ccc-” (Weak) from “bb” (Fair).
According to the credit rating agency, these ratings reflect the company’s balance sheet strength, which AM Best has assessed as very weak due to a significant exposure to less liquid affiliated investments.
The new ratings also reflect the reinsurer’s marginal operating performance, very limited business profile and weak enterprise risk management, the rating agency noted.
Moreover, according to the announcement, AM Best’s view of the company’s operating performance and business profile were adjusted downward reflecting its diminished ability to write new business while simultaneously planning to address existing liabilities.
The credit rating agency stated: “The company is working with the Bermuda Monetary Authority to reduce its exposure to affiliated assets, which is the primary driver of the material decline in its risk-adjusted capitalization.
“Finally, the company’s risk management controls have shown some weakness, including the significant year-over-year increase in affiliated assets, which the company needs to address in the near term.”
AM Best concluded: “The ratings will remain under review with negative implications until the company successfully executes on its plan to reposition its asset portfolio and bring its risk management practices in line with AM Best’s expectations.”
