A ratings agency has boosted the standing of a Bermuda-based reinsurance company after its takeover by former industry tycoon Brian Duperreault.

AM Best has removed SAC, now called Hamilton Re, from review and affirmed its financial strength rating of A- (excellent) and its issuer credit rating of a-, with an outlook of stable on both.

The move came after it was confirmed that Hamilton Insurance Group had completed its takeover of the Bermuda-based SAC and renamed it.

Mr Duperreault, the CEO of Hamilton Re, said: “The Hamilton Re team looks forward to bringing a fresh approach to insurance and reinsurance, one based not just on world-class underwriting but also a strong foundation of large data analytics, research and fully-integrated technology.

“We’re excited to get to work with our clients.”

Mr Duperreault is the former CEO of Ace Ltd and Marsh & McLennan companies.

A statement by AM Best added: “The ratings of Hamilton Re are based on its excellent risk-adjusted capitalisation, knowledgeable management team and prudent business plan.”

But it added: “Partially offsetting these positive ratings factors are the start-up nature of the company, the greater investment risk associated with an alternative investment strategy, as well as the increased competition in the reinsurance marketplace that may challenge some of the company’s investment plans.

“AM Best is concerned that there is a possibility that Hamilton could be exposed to a convergence of events due to the adjoining of underwriting risk and the present risk in an alternative investment strategy.”

It added that the “relatively high gross investment leverage used by New York-based Two Sigma Investments, which will manage Hamilton Re’s assets, was also of concern and could affect Hamilton Re’s risk-adjusted capital.

But AM Best said: “However, these risks are mitigated by Hamilton’s low underwriting leverage and experienced underwriting team.

“The investment leverage concerns are mitigated by the partially hedged nature of the portfolio, the large number of diversified liquid investments and the investment managers’s lengthy investment track record.”

Hamilton Re assets will be invested by Two Sigma Investments in a “fund of one” which will allocate capital to two different trading arms.

AM Best said: “These entities apply various strategies to invest in liquid investments in the global equity, futures, FX and derivatives markets.”

The ratings agency added that competition from existing players, as well as from other start-up firms, could hit Hamilton Re’s underwriting margins.

The AM Best statement said: “The addition of more capacity to an already overcapitalised reinsurance marketplace could pressure underwriting margins.”

It added: “Key ratings triggers that could result in positive ratings actions would be steady growth of surplus through investments and underwriting and meeting or exceeding the business plan over the long term.”

“Key ratings triggers that could result in negative rating actions would be not executing the business plan over the long term and/or having large losses that would reduce risk adjusted capital.”

SAC was launched last year with the backing of billionaire Steve A Cohen and his SAC Capital and began operations with $500 million in capital from Mr Cohen, Capital Z Partners and other investors.

But in November, the hedge fund which managed SAC’s assets pleaded guilty to insider trading and accepted responsibility for criminal behaviour by at least six of its employees.

The admission could cost the hedge fund firm $1.8 billion in civil and criminal penalties and a federal judge still needs to approve SAC Capital’s criminal guilty plea.

As part of the settlement, SAC agreed to give up managing money from outside investors — terms that precluded it from investing premiums for a reinsurance company.