LONDON–(BUSINESS WIRE)–am the best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) from ASR Re Limited (ASR Re) (Bermuda). The outlook of these credit ratings (ratings) is Stable.
The ratings reflect ASR Re’s balance sheet strength, which AM Best rates as very strong, as well as the company’s reasonable operating performance, limited business profile and reasonable risk management.
ASR Re is a wholly owned subsidiary of ASR Holdings (ASR) and the primary risk carrier within the ASR Group, a new entrant into the African specialty corporate reinsurance market. The group was initially raised with $20 million in common stock from a $50 million facility managed by Helios Investment Partners, a private equity investor and manager. An additional $20 million was drawn in 2021 and AM Best expects the remaining $10 million of committed capital to be drawn in the near to mid-term. Around $28 million was used to capitalize on ASR Re in 2021.
AM Best expects ASR Re’s risk-adjusted capital position, as measured by Best’s capital adequacy ratio (BCAR), to be maintained at its strongest level over the medium term, taking into account AM Best’s additional capital needs for new business start-ups. A compensating factor in assessing the strength of the balance sheet is the small absolute size of ASR Re’s capital and surplus by international comparison. However, this is partially 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 economic, political and financial system risks associated with operating in the African specialty reinsurance market, although this is partially mitigated by good geographic diversification.
The reasonable assessment of operating performance takes into account ASR Re’s results in 2021 and the projected performance according to its business plan, taking into account the competitive environment and the increased execution risk during the ramp-up phase.
ASR Re is a Bermuda-based reinsurer underwriting African reinsurance business sourced from associated Managing General Agents (MGAs) owned by the ASR Group. In the early years of operations, the group relies on third-party capacity providers to underwrite business. As the business matures, the group expects to diversify its capacity provider group and expand its direct book of business to reduce this dependency. ASR Group is expected to face competition from established competitors in its target markets. The group has a senior management and underwriting team with strong experience in the targeted businesses and operating environments. According to AM Best, this increases the likelihood of market acceptance and successful implementation of the group’s business plan.
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