AM Best has affirmed the financial strength rating of A (Excellent) and a long-term issuer credit rating of “a+” (Excellent) of Cavello Bay Reinsurance, a subsidiary of Enstar Group.

The outlook of these credit ratings is stable.

The credit ratings agency said the ratings reflected the firm’s balance sheet strength, assessed as very strong and its strong operating performance, favourable business profile and appropriate enterprise risk management.

“The ratings affirmation underscores Cavello Bay’s continued solid total operating earnings, which are comprised of total investment returns and run-off liability earnings,” AM Best said. “Cavello Bay’s return on equity over the past 10 years was in line with its strong operating performance assessment.”

It added that Enstar has maintained a steady deal flow through the cycle, demonstrating its favourable business profile, which will be augmented with live underwriting market facing activity once the acquisition of AF Group closes this year.

AM Best expects Cavello Bay’s risk-adjusted capitalisation to remain in the strongest range, as measured by the Best’s Capital Adequacy Ratio, after its acquisition and integration of AF Group is complete.