StarStone ratings affirmed
AM Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent) of StarStone Insurance Bermuda Limited and its subsidiary, StarStone Insurance SE of Liechtenstein.
The outlook of these credit ratings is stable.
The agency said the ratings of SIBL and SISE reflect their balance sheet strengths, which AM Best assesses as very strong, as well as their marginal operating performance, limited business profile and appropriate enterprise risk management.
It said both companies’ ratings benefit from the support of their ultimate parent, Enstar Group Limited, which has a track record of providing these subsidiaries with financial assistance and operational support.
AM Best said both companies ceased writing new business in July 2020, and SIBL has since disposed of its US subsidiaries.
SIBL bears the liabilities of business written prior to the disposal date of these companies through reinsurance agreements.
A wholly-owned subsidiary of SIBL also ceased its participation in Lloyd’s Syndicate 1301 at the end of 2020, and the subsidiary was sold in 2021.
AM Best said the liabilities of the business written during 2020 and prior Lloyd’s underwriting years of account, which were retained by SIBL, have been transferred, through reinsurance to close, into Enstar’s Legacy Syndicate 2008 at the start of 2023.
The agency said SIBL and SISE’s balance sheet strength assessments are underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s capital adequacy ratio, at year-end December 31, 2022.
AM Best said it expects risk-adjusted capitalisation for both entities to remain at the strongest level over the medium term, based on their run-off plans.
It added that SIBL’s balance sheet strength is supported by a conservative investment portfolio and significant reinsurance protection that includes loss portfolio transfers provided by Enstar group entities.
AM Best said: “The company has demonstrated positive reserve development since going into run-off with a proportion of positive development being ceded to Enstar group affiliates through LPTs.”
It added: “SISE’s balance sheet strength is supported by a conservative investment portfolio and low underwriting leverage due to the high level of cessions to its parent company, SIBL.
“Despite the companies’ improved operating performance since entering into run-off, the marginal assessments reflect their poor historical performance.
“Their limited business profile assessments consider their reduced scale as a result of corporate disposals and decision to cease writing new business.”