OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa” (Superior) of Assured Guaranty Re Overseas Ltd. (AGRO) (Bermuda). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect AGRO’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
AGRO’s risk-adjusted capital, as measured by Best’s Capital Adequacy Ratio (BCAR), is currently and projected by AM Best to be at the strongest level over the next three years. Shareholders’ equity of AGRO has increased in the past few years, and is forecast to continue doing so during the same timeframe. The company’s strong liquidity position, conservative investment portfolio and financial flexibility due to its affiliation with Assured Guaranty Re Ltd., the indirect parent, and Assured Guaranty Ltd. (AGL), the ultimate parent, as well as AGRO’s active capital management, provide support for the balance sheet assessment of strongest.
AGRO’s operating performance is assessed as adequate based on its operating results, which have been driven primarily by investment income. AGRO’s five-year average loss ratio remains low despite increased losses and decreased earned premium in 2020. Its overall expense ratio has been hampered by an increase in expenses and a decrease in earned premiums in 2020, and this has affected AGRO’s current overall operating performance.
AM Best assesses AGRO’s business profile as neutral. The company’s Life Financial Reinsurance program continues to exhibit risk profiles with very low loss probability. AGRO’s Aircraft RVI program was suspended in 2020 due to COVID-19, and is to resume when the company is once again comfortable with the program. AGRO has limited competition with minimal number of players in these lines of business segments.
AGRO’s overall ERM assessment is appropriate, as the company employs a robust ERM framework and infrastructure embedded across the AGL group of companies, of which AGRO is a member. AM Best considers AGRO’s risk assessment capabilities to be aligned appropriately with its risk profile.
The ratings also take into consideration the benefits and support AGRO receives from the AGL group of companies — a broader, successful franchise — and its importance to AGL’s overall business strategy and profile.
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