AM Best Affirms Credit Ratings of Golden Tree Reinsurance Limited

MEXICO CITY--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Golden Tree Reinsurance Limited (Golden Tree) (Bermuda). The outlook of these Credit Ratings (ratings) is stable.

Golden Tree is a subsidiary of Iris Financial Services Limited (Iris Financial) and is owned ultimately by Springbrook Corporation B.V., a privately held holding company with diversified operations in insurance, financial services and real estate.

The ratings reflect Golden Tree’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

Golden Tree was established initially in 2015 as a segregated portfolio company, and was licensed in 2019 as a Class 3A insurer under Bermuda laws to provide reinsurance capacity for commercial credit and credit life risks as part of the group’s retrocession cover, with a geographical exposure to Colombia’s insurance market.

The ratings also reflect Golden Tree’s strong balance sheet assessment, sound operating performance and its affiliation to Iris Financial, which provides synergies and operating efficiencies, as well as an appropriate ERM framework. Offsetting these positive rating factors are the company’s concentration in one business line and the strong competitive environment in its target geographic market.

Golden Tree’s capital base has strengthened over time as a result of its sound underwriting practices and capital contributions. In 2020, the company continued to sustain profitability mainly through underwriting, enabling the company to generate a return on equity of 31%. AM Best expects Golden Tree to continue to play an important role in its group’s strategy while starting to provide reinsurance capacity to third-party commercial insurers, amid healthy growth prospects and consistent profitability. Investment income, driven by a more diversified conservative strategy, has continued to support Golden Tree’s results further; however, the company is not dependent on this revenue to achieve positive bottom-line results.

Factors that could lead to a rating upgrade or outlooks revised to positive for Golden Tree include increased business diversification, consistent operating performance and sustained improvements in the group’s financial leverage. Factors that could lead to negative rating action include a material loss of capital, whether derived from a substantial decline in profitability or aggressive dividend policy, which leads to a reduced level of risk-adjusted capitalization that does not support its ratings.

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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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