A new Bermuda life reinsurer set up by an Australian investment and retirement income giant has been assigned a financial strength rating of A- (excellent) by AM Best.

Calix Re is a Class E Bermuda reinsurer whose initial capital comes from parent company Challenger Ltd, the largest provider of annuities in Australia with an approximately 90 per cent market share.

The majority of business initially placed with Calix Re will be Japan-based fixed-term annuities, AM Best said.

“Calix Re will utilise a longstanding reinsurance partnership for its initial book of business and future growth,” AM Best said.

“Initial capital will come from the parent company, Challenger Ltd, and will be invested in various long-duration assets that will match expected liabilities.”

AM Best has assessed the company’s balance sheet strength as very strong, as measured by Best’s Capital Adequacy Ratio (BCAR), and by Bermuda’s own regulatory solvency capital requirement measurement.

Capitalisation is supported by an adequate level of liquidity based on the company’s planned asset allocation and liquidity risk management plan, the rating agency said.

AM Best also issued a long-term issuer credit rating of “a-” (excellent) to Calix Re. The outlook assigned to these credit ratings (ratings) is stable.

Best said the ratings reflect Calix Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

“AM Best expects Calix Re’s operating performance assessment to remain at the adequate level based on the performance of a well-seasoned annuity block with low surrender experience that will be placed with it,” the rating agency added.