AM Best Affirms Credit Ratings of Kelvin Re Limited

LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-“ of Kelvin Re Limited (Kelvin Re) (Guernsey). The outlook of these Credit Ratings (ratings) remains stable.

The ratings reflect Kelvin Re’s balance sheet strength, which AM Best categorises as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

Kelvin Re has generated mostly negative underwriting results in its short history of operation, having been impacted by catastrophe losses in most years. Following publication of the company’s financial results for 2019, AM Best notes the negative impact of a number of catastrophe events in the year as well as adverse experience on reserves relating to catastrophe events in 2017 and 2018. However, AM Best also notes that these losses are reflective of the company’s business model and are within its risk appetite. In line with its business plans, Kelvin Re has modified its underwriting exposures in 2020, which is expected to reduce the volatility in technical performance going forward. However, the successful execution of the company’s strategy is subject to execution risk in AM Best’s opinion.

Kelvin Re’s balance sheet strength is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, excellent financial flexibility and a dynamic retrocession programme. Capital requirements are mainly driven by Kelvin Re’s exposure to catastrophe risks and the company’s holdings of alternative investment assets. To address these risks, Kelvin Re maintains a relatively high level of capital and surplus, which stood at USD 934.1 million at year-end 2019. AM Best notes that despite the company’s relatively high investment risk profile, the alternative assets produced a robust performance in the first quarter of 2020, despite volatility in global financial markets.

Kelvin Re is a privately owned company based in Guernsey that provides short-tail property catastrophe and specialty lines reinsurance. The company derives its business using the origination capabilities of Credit Suisse’s Insurance-Linked Strategies team, a leading insurance-linked securities hedge fund.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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