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AM Best affirms MS Frontier Re’s A rating

Photo by Tamell Simons Landmark building: MS Frontier Re's new home at 141 Front Street, Hamilton

Bermudian-based MS Frontier Reinsurance’s financial strength rating has been affirmed by agency AM Best.

MS Frontier retained it’s A (excellent) rating for financial strength and its a- for issuer credit.

The outlook for both is stable.

The AM Best report said: “The ratings reflect MS Frontier’s overall positive operating performance since 2011, when catastrophes negatively impacted the company.”

MS Frontier is a wholly-owned subsidiary of Mitsui Sumitomo Insurance, itself an arm of MS&AD Insurance Group Holdings.

The AM Best report added: “In addition, MS Frontier’s ratings are enhanced by the global presence, financial support and balance sheet strength of MS&AD.

“MS Frontier maintains an excellent level of risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio. The ratings also take into account the company’s structural enterprise management framework and practices and conservative investment portfolio.”

But AM Best added: “Offsetting risk factors include MS Frontier’s exposure to low-frequency, high-severity events, which could significantly reduce its capital given its focus on property, catastrophe reinsurance.”

MS Frontier writes non-catastrophe business, however, catastrophic business represents the majority of its book. This factor is partially mitigated by retrocession cover.

“Positive rating actions may result if MS Frontier maintains superior financial performance with lower volatility, continued product diversification and strong risk-adjusted surplus levels.

“Downward pressure on the rating could arise if there is a decrease in the support from the parent. Potential large-scale catastrophe events could also put downward pressure to the ratings if capital levels are significantly affected.”