A.M. Best has assigned a financial strength rating (FSR) of A (Excellent) and an issuer credit rating (ICR) of "a" to Sirius Bermuda Insurance Company Ltd (Sirius Bermuda) (Bermuda). The outlook assigned to each rating is negative. Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the ICR of "a" of Sirius International Insurance Corporation (publ) (Sirius International) (Sweden) and its subsidiary, Sirius America Insurance Company (Sirius America) (New York, NY). Additionally, A.M. Best has affirmed the ICR of "bbb" of Sirius International Group, Ltd. (Sirius Group) (Bermuda) and its existing issue ratings. The outlook for each of these ratings is negative. (See below for a listing of the issue ratings.)
Effective July 2016, Sirius Bermuda, a wholly owned subsidiary of Sirius Group, will assume a quota share from Sirius International. This is expected to result in approximately USD 65 million of net written premiums for the year. In 2017, Sirius Bermuda will additionally assume other intercompany business, bringing its total net written premium to approximately USD 500 million. The business written by Sirius International and Sirius America has historically been of good quality and prospectively, A.M. Best expects Sirius Bermuda to produce solid underwriting results. Sirius Bermuda's risk-adjusted capitalisation is anticipated to remain strong, supported by a planned capital reallocation from other group members and good earnings retention.
The affirmation of the ratings of Sirius Group and its subsidiaries reflects A.M. Best's expectation that their financial strength will remain strong following the group reorganisation. While less business will be retained by Sirius America and Sirius International, both companies are expected to maintain strong levels of risk-adjusted capitalisation and good earnings generation. The restructuring enables the Sirius Group to be more flexible and generate efficiencies.
The negative outlooks reflect A.M. Best's ongoing concern that the financial strength of the Sirius Group and its subsidiaries may deteriorate over time following its acquisition by China Minsheng Investment Corp., Ltd. (CMI). The credit profile of CMI is viewed to be materially weaker than that of Sirius Group. Established in 2014, CMI is a China-based private investment holding company that has interests in energy, aviation and real estate, in addition to insurance. A.M. Best expects Sirius Group to demonstrate an increased level of independence from CMI over the short term; failure to do so is likely to result in a negative rating action.
The following issue ratings have been affirmed with a negative outlook:
Sirius International Group, Ltd.
-- "bbb" on USD 400 million 6.375% senior unsecured notes, due in 2017
-- "bb+" on the USD 250 million non-cumulative perpetual preference shares
This press release relates to rating(s) that have been published on A.M. 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 A.M. Best's Recent Rating Activity web page.
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Copyright 2016 by A.M. Best Rating Services, Inc. ALL RIGHTS RESERVED.
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