OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has removed from under review with positive implications and upgraded the Financial Strength Rating (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” from “a-” of National Borg Reinsurance N.V. (NB Re) (Willemstad, Curacao). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings of NB Re reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM). It also reflects the benefits the company will derive as a member of the Liberty Mutual enterprise, following the close of its acquisition by that organization on Oct. 2, 2019.
The assessment of NB Re’s balance sheet strength reflects its risk-adjusted capitalization, which measures at the strongest level as calculated by Best’s Capital Adequacy Ratio (BCAR), as well as the quality of its investments, solid reinsurance program and the generally favorable development of its loss reserves. Offsetting factors in the balance sheet strength assessment is the decline in surplus following the payment of a large dividend to the prior owner, which was a key factor in driving the final assessment of very strong.
The ratings further reflect the company’s strong operating profitability, which has been sustained over the long term. The company maintains a comfortable position in the global market for surety and other specialized reinsurance products, but its overall position in that market reflects the niche nature of its products, resulting in a limited business profile. During the most recent years, NB Re’s results have reflected various operational and organizational changes implemented by its former owner, AmTrust Financial Services, Inc. With the new ownership of Liberty Mutual Holding Company Inc. (Liberty Mutual), AM Best expects a return to more consistent and favorable results.
It is expected that NB Re will benefit from the financial flexibility provided by Liberty Mutual, which maintains financial leverage that is in line with its current ratings, as well as additional liquidity sources given its access to capital markets. In addition, NB Re will cede a significant portion of its business to an affiliate, Liberty Mutual Insurance Company, under a quota-share reinsurance program.
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