AM Best affirms credit rating of Lion Re

AM Best affirms credit rating of Lion Re | Insurance Business New Zealand

Reinsurance

AM Best affirms credit rating of Lion Re

Outlook for reinsurance company is considered stable

Reinsurance

By
Abigail Adriatico

Credit rating agency AM Best has affirmed the financial strength of Lion Reinsurance Company Limited (Lion Re).

Lion Re had an “A” or excellent for its Financial Strength Rating (FSR) and an “a” or excellent for its Long-Term Issuer Credit Rating (Long-Term ICR). With such credit ratings, AM Best stated that the reinsurer’s outlook is stable.

According to AM Best’s assessment, the balance sheet of Lion Re is very strong along. The reinsurance company showed adequate operating performance, limited business profile, and appropriate enterprise risk management.

Lion Re is a subsidiary of ASSA Compañía Tenedora, S.A (ASSA Tenedora) and is owned by financial services holding company Grupo ASSA, which is publicly traded on the Panama Stock Exchange. Based in Bermuda, Lion Re assumes risks from the affiliates of ASSA Tenedora for property, auto, liability, marine, group life (short term), health and miscellaneous businesses.

AM Best has also recognized the strategic role that the reinsurer is aiming to achieve when it comes to the overall regional strategy of the group but has pointed out that the business profile of Lion Re is considered to be limited because of its accessibility to markets in contrast to other commercial reinsurers in the market.

With the Best’s Capital Adequacy Ratio (BCAR), the reinsurer’s capital base is supportive of risk-adjusted capitalization being assessed at the strongest level. As Lion Re consolidates the operations of ASSA Tenedora in the Central America region though providing capacity for reinsurance, the reinsurer cements its importance in the group’s strategy.

Meanwhile, Lion Re’s adequate level of operating performance is because of the Central American insurance companies that it is affiliated with and also its affiliation to Grupo ASSA, which provided the reinsurer with synergies, operating efficiencies, and support for guarantees, AM Best said.

With the reinsurer consistently reviewing its underwriting guidelines in order to improve the performance of its business segments which have deviated for its targets, the reinsurer’s investment income which is based on a conservative strategy continues to support its results. However, Lion Re is not dependent on this when it comes to achieving positive bottom-line results, AM Best said.

A greater degree of perceived integration of Lion Re’s role in the group while also maintaining the guaranteed support of its parent firm may lead to more positive rating actions. On the other hand, a material loss of capital which reduces its risk-adjusted capitalization to a level which does not support the ratings or the diminishing of Lion Re’s strategic importance to the group may lead to a negative rating action.