LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of “a” of Sirius International Insurance Corporation (publ) (Sirius) (Sweden), and the ICR of “bbb” of its upstream intermediate holding company, Sirius International Group, Ltd. (Sirius Group) (Bermuda). Concurrently, A.M. Best has affirmed the debt ratings of Sirius Group. The outlook for all ratings is stable. (See below for a detailed listing of all debt ratings.)
The ratings reflect Sirius’ strong risk-adjusted capitalisation, robust earnings and good business profile.
Sirius’ consolidated risk-adjusted capitalisation is expected to remain strong, supported by a comprehensive retrocession programme and stable earnings. Furthermore, balance sheet strength is enhanced by Sirius’ safety reserve, which amounted to SEK 10.5 billion (USD 1.6 billion) at year-end 2013. In 2013, Sirius’ profit before tax of SEK 2.4 billion (USD 364 million) was supported by low frequency in natural catastrophe claims and solid investment income. Given the benign loss environment during the first half of 2014, and assuming catastrophe activity remains within budget for the rest of the year, earnings are forecast to be robust at year-end.
These positive factors are partially offset by challenging market conditions affecting reinsurance pricing globally. While Sirius’s consolidated gross premium written decreased by 5% in 2013, the group’s diversification by line of business and geographically, and long standing relationships to its cedants, are expected to support stabilising business volumes in subsequent years.
Upward rating movement is unlikely at present. Downward rating pressures could occur if there were a material decline in Sirius’ risk-adjusted capitalisation or a prolonged deterioration in operating earnings.
The following debt ratings have been affirmed:
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
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilised:
- Analyzing Insurance Holding Company Liquidity
- Catastrophe Analysis in A.M. Best Ratings
- Equity Credit for Hybrid Securities
- Insurance Holding Company and Debt Ratings
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding Universal BCAR - A.M. Best's Capital Adequacy Ratio for Insurers
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
This rating announcement has been issued by A.M. Best Europe – Rating Services Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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