Stable credit ratings for ASR Re – The Royal Gazette
Created: August 26, 2022 4:25 p.m.
AM Best confirmed the ratings of ASR Re Limited
AM Best has affirmed Bermuda-based ASR Re Limited’s financial strength rating of B++ (good) and long-term issuer credit rating of ‘bbb+’ (good).
The outlook for these credit ratings is stable.
The ratings reflect the strength of ASR Re’s balance sheet, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate management of business risks.
ASR Re is a 100% subsidiary of ASR Holdings and is the main risk carrier within the ASR group, a new entrant in the African market for specialized corporate reinsurance.
The group was initially capitalized with $20 million in common equity, drawn from a $50 million facility managed by Helios Investment Partners, a private equity investor and manager.
An additional $20 million has been drawn down in 2021, and AM Best expects the remaining $10 million of committed capital to be drawn down in the short to medium term. Approximately $28 million was used to capitalize ASR Re in 2021.
AM Best expects ASR Re’s risk-adjusted capitalization, as measured by Best’s capital adequacy ratio, to be maintained at the highest level over the medium term, taking into account capital needs. additional capital from AM Best for the creation of new companies.
A compensating factor in assessing the strength of the balance sheet is the small absolute size, by international standards, of ASR Re’s capital and surplus. However, this is partly offset by its relatively small net line size. and the good credit quality of its retrocession panel.
In addition, ASR Re is exposed to the high levels of economic, political and financial risks associated with operating in the African specialty reinsurance market, although this is partially mitigated by good geographic diversification.
The proper assessment of operational performance takes into account ASR Re’s results in 2021 and projected performance according to its business plan, taking into account the competitive environment and the increased execution risk during its start-up phase.
ASR Re is a Bermuda-domiciled reinsurer, which underwrites reinsurance business in Africa provided by affiliated general agents belonging to the ASR Group.
During its first years of operation, the group depends on third-party capacity providers to underwrite contracts. As the activity matures, the group should diversify the panel of capacity providers and develop its portfolio of direct activities, thus reducing this dependence.
The ASR Group is expected to face competition from well-established peers in its target markets.
The group has a management and underwriting team in place that is well experienced in the targeted business categories and operating environment.
According to AM Best, this increases the likelihood of market acceptance and successful execution of the group’s business plan.