Kroll Bond Rating Agency has reaffirmed the A financial strength ratings of Somerset Reinsurance Ltd and its American subsidiary, Somerset Reinsurance Co, along with the BBB+ issuer rating of Somerset Holdings International Ltd. All ratings carry a Stable outlook.

The Bermudian-based life reinsurer posted a 71 per cent increase in 2024 net profit to $108.8 million, driven by stronger underwriting performance and a jump in insurance revenue to $408 million after taking on several major American reinsurance deals.

Somerset’s Bermuda Solvency Capital Requirement solvency ratio was 228 per cent, backed by $1.2 billion in liquidity and a well-capitalised balance sheet.

KBRA noted Somerset’s strong International Financial Reporting Standards-17 insurance service margin of 28.3 per cent and combined margin of 32 per cent, showing “substantial embedded future profitability” from its contractual service margin. The agency also praised Somerset’s strong risk management framework, close asset-liability matching, and high-quality investment portfolio, with nearly 95 per cent of assets rated investment grade.

The report said the company continues to benefit from its parent, Aquarian Holdings, which has provided about $800 million in growth capital through March 2025. However, KBRA cautioned that Somerset still faces execution risk and reliance on a single sponsor as it expands under the Aquarian platform and works to meet Bermuda’s new prudential and solvency regulatory requirements.

Governance changes in 2024 included the appointment of Curtis Dickinson, Bermuda’s former Minister of Finance, as an independent non-executive director and chairman of the investment committee.

KBRA said the stable outlook reflects its expectation that Somerset will keep strong capital and liquidity “at or near current levels” while continuing to grow its life and annuity business profitably.

• For the full Surveillance Report from KBRA, see Related Media

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