Bermuda-based Citadel Reinsurance Company Limited has received a $25 million balance sheet cash injection from parent company Citadel Risk Group.

The group also injected $10 million into the balance sheet of New Jersey-based American Millennium Insurance Company, which is wholly-owned by island-based Citadel Re.

Citadel’s balance sheet at September 30 stands at $47.1 million.

AMIC’s balance sheet at September 30 stands at $21.9 million.

In addition, Citadel Risk Group said that a reinsurance stop loss has been put in place to “cap” the AMIC losses, which led to a rating downgrade in February.

The company said that consolidated pretax profit for the six months to June 30 was $2.5 million, and consolidated surplus at year end 2021 will be approximately $55 million, with an additional $20 million expected in early 2022.

The group’s CEO, Tony Weller, said: “It has been a tough year for Citadel, and I am extremely pleased to announce this major investment and financial strengthening of the group’s balance sheet.

“The enhanced capital base will allow us to write larger lines and develop AMIC into a wider and more diverse insurance entity.

“The group will be preparing new submissions for an immediate re-rating with AM Best, and the enhanced capital structure will be a positive uplift.

“I sincerely thank all our clients and partners for their support during a difficult time and look forward to working with them to explore many new opportunities.”

Citadel Risk Group said that the three separate arrangements concluded by the group are all subject to regulatory approval.

In mid-July, AM Best maintained the under review with negative implications status for the financial strength rating of C- (Weak) and the long-term issuer credit rating of cc (Weak) of AMIC.

Additionally, AM Best maintained the under review with negative implications status for the FSR of B (Fair) and the long-term ICR of bb (Fair) of Citadel Re.

AM Best downgraded the credit ratings of AMIC and Citadel Re in February and maintained the under review with negative implications status after the downgrade of the ratings of AMIC in October last year.

The agency said that these rating actions resulted from persistent net underwriting losses that continued into the second half of 2020 and negatively impacted the risk-adjusted capitalisation of AMIC and Citadel Re given its direct ownership of AMIC.

Citadel Risk said that it is a niche, rated reinsurance carrier that owns a rated US insurance entity, has a rent-a-captive facility in Bermuda and provides back-office services to the re/insurance sector.

Bermuda-based Citadel Re is licensed by the Bermuda Monetary Authority as a Class 3A insurer.

It is the parent of AMIC, which focuses on the transport industry.