A.M. Best Maintains Under Review Status with Negative Implications for Sirius International Group, Ltd. and Its Main Subsidiaries

A.M. Best has maintained the under review status with negative implications for the Long-Term Issuer Credit Rating (Long-Term ICR) of "bbb" of Sirius International Group, Ltd. (SIG) (Bermuda). In addition, A.M. Best has maintained the under review status with negative implications for the Financial Strength Ratings of A (Excellent) and the Long-Term ICRs of "a" of SIG's main subsidiaries: Sirius Bermuda Insurance Company Ltd. (Bermuda), Sirius International Insurance Corporation (publ) (Sweden), and Sirius America Insurance Company (New York, NY).

These rating actions follow the announcement on June 25, 2018, that SIG's parent, Sirius International Insurance Group, Ltd. (SIIG) and Easterly Acquisition Corp. (Easterly) have executed a definitive agreement and plan of merger for a proposed business combination that would result in SIIG becoming a publicly listed company. In addition, SIIG has announced that the agreement for it to acquire a controlling interest in The Phoenix Holdings Ltd. (The Phoenix) (a leading Israeli composite insurer) will terminate on or prior to July 2, 2018.

These ratings were first placed under review with negative implications on Nov. 27, 2017, following the announcement of the agreement for SIIG to acquire a controlling interest in The Phoenix.

The under review with negative implications status has been maintained as A.M. Best needs time to review the implications of the latest announcements on the rating fundamentals of SIG and its rated subsidiaries.

Under the terms of the transaction between SIIG and Easterly, Easterly will merge with a wholly owned subsidiary of SIIG. Upon completion of the merger, Easterly's common shares will be exchanged for SIIG's common shares at a price of 1.05 times SIIG's pro forma diluted GAAP book value per share as of June 30, 2018. Once the merger is complete (which is expected at the end of the third quarter or beginning of the fourth quarter of 2018), SIIG's common stock will be traded on the NASDAQ.

Pursuant to the merger, SIIG also intends to execute a private placement of common shares, which should further dilute the shareholding of SIIG's ultimate parent, China Minsheng Investment Group Corp., Ltd. (CMIG).

In A.M. Best's opinion, the credit profile of CMIG is materially weaker than that of SIIG, and this could lead over time to a deterioration of the credit fundamentals of SIIG and its rated subsidiaries. A.M. Best views the expected listing on the NASDAQ as a positive step toward diluting CMIG's influence on SIIG. However, any associated benefits, primarily in terms of governance, will take time to materialise.

The ratings will remain under review until SIIG is publicly listed and A.M. Best has completed its review of the impact of recent announcements on the rating fundamentals of SIG and its subsidiaries.

This press release relates to Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases

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A.M. Best
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Senior Financial Analyst
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Christopher Sharkey, [phone], ext. 5159
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Ghislain Le Cam, CFA, FRM, [phone]
Director, Analytics
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Jim Peavy, [phone], ext. 5644
Director, Public Relations
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