Fed Re Ltd, a Class E insurer registered with the Bermuda Monetary Authority in September, has been assigned a preliminary credit assessment by AM Best.

The ratings agency has assigned Fed Re with a financial strength assessment of A- pca (Excellent) and a long-term issuer credit assessment of “a-” pca (Excellent).

The outlooks assigned to these PCAs are stable.

The PCAs reflect Fed Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The PCAs also reflect AM Best’s expectation that Fed Re’s risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, will remain in the strongest category and that Fed Re will have a continued trend of profitable premium growth and capital expansion, both organically and through contributions, as set forth by management in its business plans.

Fed Re is a subsidiary of Illinois-headquartered Federal Life Group Inc, and its ultimate parent, Insurance Capital Group LLC. ICG is an affiliate of Bain Capital, and Fed Re is an affiliate of Federal Life Insurance Company.

AM Best said Fed Re has a growing premium base and high dependence on sourcing reinsurance transactions to gain scale.

It said management projections are based on multiyear guaranteed annuity flows from Fed Life, as well as lead generation for reinsurance transactions from ICG.

The agency said the company will focus on MYGAs written by multinational carriers and life products with lower risk profiles.

It added that an experienced management team supports Fed Re’s ability to meet growth plans.