The Bermuda-based reinsurance arm of Legal & General Group, Legal & General Reinsurance Company No. 2, has launched to target the Canadian pension risk transfer market and has been assigned a Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” (Excellent) by AM Best.
The outlook assigned to these Credit Ratings is stable.
According to AM Best, the ratings reflect L&G Re 2’s balance sheet strength, which it assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
AM Best suggests the ratings also factor in L&G Re 2’s importance to the group as a vehicle to compete and expand in PRT markets outside the UK and US, as well as the financial and operational support it receives from its parent.
L&G Re 2’s balance sheet strength is underpinned by risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which it expects to be maintained at the strongest level through a forecast period of five years.
The adequate operating performance assessment also considers the company’s five-year business plan, with AM Best expecting that L&G Re 2 will grow its portfolio of Canadian PRT business gradually.
The rating agency states that L&G has provided the initial capital and is expected to support L&G Re 2’s business growth, and anticipates that the reinsurer will benefit from its parents knowledge and expertise in the PRT business, as well as the group’s investment platforms and risk management oversight.
