Bermuda-based MS Frontier Reinsurance Ltd. has been assigned a financial strength rating of A (excellent) and an issuer credit rating of "a+" by AM Best Co.

The outlook assigned to both ratings is stable.

MS Frontier is a wholly owned subsidiary of Mitsui Sumitomo Insurance Co. Ltd. (MSI), which is the main trading subsidiary of Mitsui Sumitomo Insurance Group Holdings, Inc. MS Frontier serves as one of MSIG's strategic insurance vehicles designed to achieve the group's geographical portfolio optimisation and risk diversification.

MS Frontier maintains a conservative business model and uses the global recognition and the balance sheet strength of its parent for competitive advantage.

The ratings assigned to MS Frontier reflect the significant financial support and the reinsurance cover it receives from MSI, as well as its excellent level of risk-adjusted capitalisation.

Under a credit support agreement, MSI agrees to own and hold all of MS Frontier's outstanding shares, maintain a positive tangible net worth and unconditionally and irrevocably guarantee all of its obligations.

Both companies have a facultative obligatory reinsurance facility under which MSI agrees to reinsure all new exposures when MS Frontier's annual aggregate probable maximum loss amount, with a specified non-exceedance probability, exceeds a specific level of total adjusted stockholders' equity.

Partially offsetting rating factors include MS Frontier being challenged by increased competition from both established and start-up companies seeking to enter the Bermuda property catastrophe industry market, the highly volatile nature of catastrophe risks and soft pricing conditions.