OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa” of Assured Guaranty Re Overseas Ltd. (AGRO) (Bermuda). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect AGRO’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
AGRO’s risk-adjusted capital, as measured by the Best Capital Adequacy Ratio (BCAR), is currently and projected to be at the strongest level over the next year to three years. Shareholders’ equity at AGRO has increased in the past few years, and further increases are expected in the near term. The company’s strong liquidity position, conservative investment portfolio and financial flexibility due to its affiliation with Assured Guaranty Re Ltd., the indirect parent, and Assured Guaranty Ltd. (AGL), the ultimate parent, as well as AGRO’s active capital management using its internal capital model, provide support of the balance sheet assessment of strongest.
AGRO’s operating performance is assessed as adequate based on its operating results that have been driven primarily by investment income. An increase in expenses related to its target lines of business — aircraft residual value insurance and life financial reinsurance — has hampered AGRO’s overall operating performance; however, AGRO forecasts faster revenue growth from its target lines of business versus more moderate expense growth.
AGRO’s business profile is assessed as neutral, as its target lines of business exhibit risk profiles with low loss probability, with an attractive pricing environment and minimal number of players.
AGRO’s overall ERM assessment is appropriate, as the company employs a robust ERM framework and infrastructure embedded across the AGL group of companies, of which AGRO is a member. AM Best considers AGRO’s risk assessment capabilities to be aligned appropriately with its risk profile.
The ratings also take into consideration the benefits and support AGRO receives from the AGL group of companies — a broader, successful franchise — and its importance to AGL’s overall business strategy and profile.
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