LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” of Sompo Japan Canopius Reinsurance AG (Switzerland). The outlook of these Credit Ratings (ratings) remains stable.
The ratings of Sompo Japan Canopius Reinsurance AG reflect its supportive risk-adjusted capitalisation and the expectation of good operating results. The company’s risk management and business profile benefit from its close integration with the specialty (re)insurance operations of Sompo Canopius AG (Sompo Canopius). In addition, the ratings reflect Sompo Japan Canopius Reinsurance AG’s strategic importance to Sompo Japan Nipponkoa Insurance Inc. (SJNKI), as its specialist global reinsurance platform outside of Lloyd’s, and an unconditional parental guarantee provided by SJNKI. An offsetting rating factor is the company’s exposure to natural catastrophe losses, which is expected to contribute to volatile underwriting performance over the longer term. This factor is mitigated partly by strong catastrophe risk management within Sompo Canopius.
Sompo Japan Canopius Reinsurance AG was incorporated in Switzerland on 23 November 2015, following the redomiciliation of Canopius Reinsurance Limited from Bermuda. As of 30 September 2016, the company had shareholders’ funds of USD 503 million. A.M Best expects SJNKI to inject approximately USD 400 million of capital into Sompo Japan Canopius Reinsurance AG over the next three years to support growth.
The company underwrites third-party reinsurance business through a network of branches in Switzerland, Bermuda and, prospectively, the United States and Singapore. Property and casualty reinsurance is expected to contribute the majority of Sompo Japan Canopius Reinsurance AG’s reported gross revenues in 2016. The company’s business generation benefits from existing relationships and expertise within Sompo Canopius and the wider Sompo group. However, strong competition makes this a difficult time to operate in the global reinsurance market.
In A.M. Best’s opinion, the Sompo group remains committed to Sompo Japan Canopius Reinsurance AG. However, the planned takeover of Endurance Specialty Holdings Ltd. by SOMPO Holdings Inc., and the potential reshaping of the Sompo group’s international reinsurance operations, are likely to influence Sompo Japan Canopius Reinsurance AG’s business volumes. A.M. Best will monitor closely the development of Sompo Japan Canopius Reinsurance AG’s operations through 2017.
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.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.
