AM Best has removed from under review with negative implications and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) of StarStone Insurance Bermuda Limited (SIBL) (Bermuda) and StarStone Insurance SE (SISE) (Liechtenstein). The outlook assigned to the Credit Ratings (ratings) is stable.
The ratings of SIBL reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM). The ratings of SISE reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate ERM. Both companies’ ratings benefit from the support of their ultimate parent, Enstar Group Limited (Enstar), which has a track record of providing them with financial assistance and operational support.
Both companies ceased writing new business in July 2020, and SIBL has since disposed of its U.S. subsidiaries and participation in Lloyd’s Syndicate 1301. SIBL bears the liabilities of business written prior to the disposal date of these companies through reinsurance agreements.
AM Best expects the risk-adjusted capitalisation of SIBL and SISE, as measured by Best’s Capital Adequacy Ratio (BCAR), to remain at the strongest level in the medium term based on the consolidated run-off plan for these entities.
SIBL’s balance sheet strength is supported by a relatively conservative investment portfolio and significant reinsurance protection that includes loss portfolio transfers provided by Enstar group entities. Although historical reserve volatility is an offsetting factor, the company’s current reserve position is considered more robust than in 2018 and 2019 and development patterns improved during 2020. AM Best expects any further disposals of subsidiaries to be immaterial to SIBL’s risk-adjusted capitalisation. SISE’s balance sheet strength is supported by a conservative investment portfolio and low underwriting leverage due to the high level of cessions to parent company SIBL.
The companies’ marginal operating performance assessments reflect their poor historical performance. Their limited business profile assessments consider their significantly reduced scale as a result of corporate disposals and the decision to cease writing new business.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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Contacts:
Senior Financial Analyst
+44 20 7397 4395
will.keen-tomlinson@ambest.com
