AM Best has assigned a preliminary credit assessment to Fortium Insurance Co Ltd, a Bermuda start-up planning to write short-tailed speciality insurance business.

The ratings agency assigned Fortium a Financial Strength Assessment of A- pca, or excellent, and a Long-Term Issuer Credit Assessment of “a-” pca, also excellent. The outlook is stable.

The company is expected to receive an initial capital contribution of about $110 million this year, which, alongside retained earnings, is intended to support major premium growth in its early years.

AM Best said the assessment was based on Fortium’s projected balance-sheet strength, which it expects to remain at the “very strong” level during the company’s first five years.

Fortium plans to cede all of its premiums to reinsurers, AM Best said, leaving it exposed to credit risk from reinsurance recoverables. The ratings agency said that risk was expected to be partly reduced through the use of highly-rated or fully-collateralised counterparties.

AM Best said Fortium’s planned investment portfolio would be relatively conservative, with less risk and more stability.

The company’s business plan calls for short-tailed speciality business diversified to some extent by line of business and geography. AM Best said Fortium’s management team had experience in speciality lines, but noted that the company faced the risks common to start-ups and the challenge of building market share while trying to make a profit.

Since the company is a start-up, the preliminary assessment is based on Fortium’s business plan and projections rather than its operating record.

The Royal Gazette has reached out to AM Best for more information on the new company and its plans for operations in Bermuda.