Bermuda-based property & casualty re/insurance run-off group Premia Holdings assumed risks from two Lloyd’s of London syndicates in the fourth quarter of 2019.
The previously undisclosed deals were acknowledged by Kroll Bond Rating Agency (KBRA) in its recent assessment of the company, which had its financial strength rating confirmed as A-.
The first transaction, completed on November 12, 2019, was with a Lloyd’s syndicate that was launched in 2008 and writes a range of classes, including marine, casualty treaty, financial and professional indemnity, healthcare, energy, cyber, and property.
Under the terms of the agreement, Premia Re assumed 50% of the economic interest for the 2018 and prior years of account, as well as certain related special purpose arrangements effect July 1, 2019.
Later in the quarter, on December 31, 2019, Premia Re then closed on a second Lloyd’s of London syndicate transaction, in which it assumed 100% of the economic interest for the 2017 and 2018 years of account.
In total, Premia Re closed four transactions during 2019, with mutual agreement reached on two further ones by year-end that are currently awaiting regulatory approval.
Premia Re is a class 4 Bermuda specialty reinsurer that is focused on acquiring non-life run-off liabilities, and whose holding company is sponsored by Arch Capital Group Ltd. and Kelso & Company.
KBRA explained that its favourable outlook on the company reflects its sound capitalisation, consistent operating profitability, seasoned management team, and whole account quota share agreement by Arch Re.
As of September 30, 2019, Premia Re had equity of $588.4 million, while Premia Holdings had capitalisation of capitalization of $552.7 million with $443.2 million equity and $109.3 million debt.
Net income since inception amounts to $57.5 million for Premia Re as of this date, and $11.6 million for Premia Holdings.
KBRA considers the company to benefits from a transaction-specific and overall diversified investment strategy, with its portfolio consisting largely of liquid, high credit quality fixed income securities.
Premia’s founding sponsors are also believed to be accretive to its credit strengths, as Kelso was a founding investor of Third Point and has considerable experience in the insurance and run-off sectors.
Finally, analysts noted that non-life run-off business is largely insulated from economic downturn/recession risk, and run-off carriers have generally exhibited return characteristics that are uncorrelated with the broader financial markets.
