International financial services ratings agency A.M. Best has downgraded the credit ratings of Sirius International Insurance Group, Ltd. and its main rated subsidiaries, and, at the same time, has placed these ratings under review with negative implications.
Specifically, A.M. Best has downgraded the Financial Strength Ratings (FSR) to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a-” from “a” of Sirius Bermuda Insurance Company Ltd., Sirius International Insurance Corporation, and its subsidiary Sirius America Insurance Company.
Additionally, the ratings agency has downgraded the Long-Term ICR to “bbb-” from “bbb” of Sirius International Insurance Group, Ltd. and Sirius International Group, Ltd.
Concurrently, advises A.M. Best, it has placed all of these ratings under review with negative implications.
A.M Best states that the ratings reflect the company’s consolidated balance sheet strength, which is sees as very strong.
“The rating actions follow the execution of a written resolution on 25 February 2020 by CM Bermuda Ltd. (CM Bermuda), a wholly owned subsidiary of China Minsheng Investment Group Corp., Ltd. (CMIG) and SIIG’s controlling shareholder, which may prohibit SIIG’s Board of Directors from issuing any shares and taking certain other actions with respect to the shares without the prior approval of holders of the common shares of SIIG representing at least 75% of the shareholder voting rights (CM Bermuda has 87% of the shareholder voting rights),” explained A.M. Best.
The ratings agency continues to explain that the rating downgrades reflect the negative impact on the rating fundamentals of the company from its association with CIMG.
“In addition, the ratings have been placed under review with negative implications as AM Best needs to assess whether the safeguard mechanisms that SIIG has had in place, since its listing on the Nasdaq in 2018, are sufficiently strong to protect the independence of its operations from CMIG,” says A.M. Best.
A.M. Best said in November of last year that it revised its outlooks to negative from stable for Sirius, citing deteriorating operating performance metrics that have impacted the firm since 2017, and debt and liquidity issues of its ultimate parent, China Minsheng Investment Group.