OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” to Fergus Reinsurance Limited (Fergus) (Hamilton, Bermuda). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Fergus’ balance sheet strength, which AM Best categorizes as adequate, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.
Fergus was incorporated in Bermuda on June 11, 2008 and is registered as a Class 3A insurer under The Insurance Act 1978, as well as a segregated accounts company under The Segregated Accounts Company Act 2000. Fergus writes low severity, high frequency reinsurance programs with a focus on underwriting quality risk in a disciplined and diversified manner. The company currently has a small number of programs in its only active cell. While Fergus benefits from certain portfolio and geographic diversity, its business profile is considered limited.
Fergus experienced volatile operating performance from 2008-2017, when it operated as a family-owned company concentrated on a limited book of reinsurance programs. During the second quarter of 2018, Fergus was recapitalized with $10.8 million in equity investments, an amount that has increased to $29 million as of October 2019.
The operating performance assessment reflects the company’s historically volatile underwriting performance and future uncertainties regarding the execution of its long-term strategy. The company’s performance in 2019 was characterized by relatively low premium writings as it focused on raising additional equity and establishing disciplined processes for sourcing and underwriting programs in the cell, but it expects premium growth in 2020. Net investment income, albeit modest, is generated solely from interest on a conservatively invested asset portfolio.
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