LONDON--(BUSINESS WIRE)--AM Best has placed under review with negative implications the Financial Strength Ratings (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of StarStone Insurance Bermuda Limited (SIBL) (Bermuda) and its rated subsidiaries: StarStone Insurance SE (SISE) (Liechtenstein), StarStone Specialty Insurance Company (SSIC) (Wilmington, DE) and StarStone National Insurance Company (SNIC) (Wilmington, DE).
The rating actions follow the announcement on 10 June 2020 by SIBL’s ultimate parent, Enstar Group Limited (Enstar), that its majority stake in SSIC and SNIC will be diluted to a minority interest through capital provided by new investors. Concurrently, SISE and SIBL will be placed into runoff.
The under review with negative implications status of SSIC and SNIC reflects AM Best’s expectation that the rating enhancement provided to these two companies through Enstar’s majority ownership will be removed on completion of the transaction. While Enstar is maintaining a significant ownership in SSIC and SNIC, it is no longer sufficient to provide explicit rating enhancement, but will be contemplated in the companies’ other building block assessments. This under review status will be resolved when AM Best has completed a ground-up analysis of SNIC and SSIC to evaluate the impact of the planned transaction and change in strategic direction on these companies’ building block assessments. Furthermore, if the transaction is not successfully completed, AM Best will need to re-evaluate the current level of rating enhancement provided to SNIC and SSIC and their strategic importance within the wider Enstar group.
While AM Best expects Enstar to support the runoff of SIBL and SISE, there is uncertainty surrounding their risk-adjusted capitalisation following the restructuring of the group. In addition, there may be negative pressure on the business profiles of these companies, given the runoff nature of the remaining business.
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