AM Best has affirmed the Financial Strength Ratings of A- (Excellent) and the Long-Term Issuer Credit Ratings of "a-" (Excellent) of StarStone Insurance Bermuda Limited (SIBL) (Bermuda) and StarStone Insurance SE (SISE) (Liechtenstein). The outlook of these Credit Ratings (ratings) is stable.
The ratings of SIBL and SISE reflect their balance sheet strength assessments, which AM Best evaluates as very strong, as well as their adequate operating performance, very limited business profile and appropriate enterprise risk management assessments. Both companies' ratings benefit from the support of their ultimate parent, Enstar Group Limited (Enstar), which has a track record of providing these subsidiaries with financial assistance and operational support.
Both companies ceased underwriting new business in July 2020, and SIBL has since disposed of its U.S. subsidiaries and Lloyd's operations. SIBL bears the liabilities of business written prior to the disposal date of these companies through reinsurance agreements, however, the liabilities related to the Lloyd's operations, which were retained by SIBL, were transferred, through reinsurance to close into Enstar's Legacy Syndicate 2008 in 2023.
SIBL and SISE's balance sheet strength assessments are underpinned by risk-adjusted capitalisation comfortably at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR), at year-end 2023. AM Best expects risk-adjusted capitalisation for both entities to remain at the strongest level over the medium term, based on their runoff plans.
SIBL's balance sheet strength is supported by a conservative investment portfolio and significant reinsurance protection that includes loss portfolio transfers (LPTs) provided by Enstar group entities. The company has demonstrated positive reserve development since entering runoff, with a proportion of the positive reserve development being ceded to Enstar group affiliates through LPTs. SISE's balance sheet strength is supported by a conservative investment portfolio and low net underwriting leverage due to its high cessions ceded to its parent company, SIBL.
The companies' improved operating performance, partially through efficient claims management since entering runoff, is supportive of their adequate assessments. Their very limited business profile assessments consider their significantly reduced scales as a result of corporate disposals and the decision to cease writing new business, restricting prospective revenues.
This press release relates to Credit Ratings that have been published on AM 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 AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings Assessments.
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