A.M. Best has commented that the credit ratings of Sirius International Insurance Group, Ltd (SIIG) and its main subsidiaries are unchanged, noting that its November 2018 Nasdaq listing reinforces its independence from its ultimate parent, China Minsheng Investment Group Corp., Ltd. (CMIG).
The comments from global financial services ratings agency, A.M. Best, comes after a reported missed bond payment and liquidity issues concerning CMIG, which is the ultimate parent company of SIIG.
The ratings agency has said that the Long-Term Issuer Credit Ratings of “bbb” of SIIG (Bermuda) and Sirius International Group, Ltd. (Bermuda), as well as the Financial Strength Ratings of “A” (Excellent) and the Long-Term Issuer Credit Ratings of “a” of Sirius Bermuda Insurance Company Ltd. (Bermuda), Sirius International Insurance Corporation (publ) (Sweden) and Sirius America Insurance Company (New York, NY), are unchanged following the reports.
Ultimately, A.M. Best believes that SIIG’s listing on the Nasdaq in 2018, combined with compliance with the listing requirements, has strengthened the firm’s governance while improving its transparency, which, the ratings agency says reinforces its independence from CMIG.
Once the Nasdaq listing had completed, CMIG’s shareholding in SIIG declined, with SIIG then establishing a majority independent Board of Directors. Out of the six Directors, just one represents CMIIG, and, A.M. Best adds that the independence of the SIIG Board is also protected by a shareholder’s agreement which runs until November 2021.
Also supporting its independence from its ultimate parent, despite CMIG’s recent issues, is the fact that its rated subsidiaries operate in regions such as Bermuda, Sweden, the U.S., and the UK, all of which are jurisdictions that have strong regulatory oversight.
“AM Best considers that these elements shield SIIG’s financial strength from any potential adverse parental influence, in particular the risk of capital extraction from the company.
“AM Best will continue to monitor closely any developments regarding CMIG’s financial strength, and could take prompt action should the mechanisms in place to preserve SIIG’s integrity prove ineffective,” says the ratings agency.
Local Chinese media reports highlight a deepening liquidity issue for CMIG, as its business model has come under increasing pressure in light of tighter regulations surrounding the country’s financial services sector. Reports state that CMIG is strapped for cash, and is subsequently looking for new shareholders.
