AM Best has assigned a financial strength rating of A- (Excellent) and a long-term issuer credit rating of “a-” (Excellent) to Accelerant Re Ltd (Bermuda).

The outlook assigned to these credit ratings is stable.

Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the long-term ICR of “a-” (Excellent) of Accelerant Insurance Europe SA (AIE) (Belgium), Accelerant Specialty Insurance Company (ASIC) (Little Rock, Arkansas) and Accelerant National Insurance Company (ANIC) (Wilmington, Delaware).

The companies are wholly owned subsidiaries of Accelerant Holdings (Cayman) Ltd (Accelerant), the non-operating holding company of the Accelerant group. The outlook of these ratings is stable.

The ratings reflect the consolidated balance sheet strength of Accelerant, which AM Best assesses as very strong, as well as Accelerant’s adequate operating performance, limited business profile and appropriate enterprise risk management.

In AM Best’s view, Accelerant Re, AIE, ASIC and ANIC are strategically important to and integrated within Accelerant.

The agency said AIE, ASIC and ANIC play a key role in the group’s strategy of providing insurance capacity to managing general agents in the United Kingdom, the European Union and the United States. Accelerant Re is the group’s internal reinsurer.

Accelerant’s balance sheet strength is underpinned by risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, that is expected to be maintained at the strongest level as the group grows, taking into account AM Best’s additional capital requirements for new company formations.

In December, the group raised $162 million from external investors, pre-funding its growth plans and demonstrating financial flexibility. The group remains highly reliant on reinsurance, given its low retention, but has further diversified its reinsurance panel since launch, reducing dependence on any single reinsurance partner, AM Best said.

Accelerant reported a net loss after tax for 2020, largely due to non-recurring items; however, AM Best expects earnings to improve significantly in future periods. Whilst the group has exceeded its initial growth targets and demonstrated early indications of market acceptance, its business profile remains limited, reflecting the absence of an established market position and its small scale, at present.

The agency said ratings of Accelerant Insurance Limited (AIL) (Malta) have been withdrawn following the surrender of the company’s licence, with AIE becoming the group’s primary carrier for business from the United Kingdom and the European Union.