AM Best Affirms Credit Ratings of Assured Guaranty Re Overseas Ltd.
July 19 2024 - 10:48AM
Business Wire
AM Best has affirmed the Financial Strength Rating of A+
(Superior) and the Long-Term Issuer Credit Rating of “aa”
(Superior) of Assured Guaranty Re Overseas Ltd. (AGRO) (Bermuda).
The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect AGRO’s balance sheet strength, which AM Best
assesses as strongest, as well as its adequate operating
performance, neutral business profile and appropriate enterprise
risk management (ERM).
AGRO’s risk-adjusted capitalization, as measured by Best’s
Capital Adequacy Ratio (BCAR), is projected by AM Best to remain at
the strongest level over the next year. AGRO’s shareholders’ equity
rebounded in 2023 after a decrease in 2022 due to mark downs in its
investment portfolio. The company’s strong liquidity position,
conservative investment portfolio and well-positioned financial
flexibility due to its affiliation with Assured Guaranty Re Ltd.,
the indirect parent, and Assured Guaranty Ltd. (AGL), the ultimate
parent, as well as AGRO’s active capital management, provide
support for the balance sheet strength assessment of strongest.
AM Best assesses AGRO’s operating performance as adequate based
on its operating results, which continue to be driven primarily by
investment income. The company’s loss ratio remained negative in
2022-2023 after being heightened in 2020-2021. The decrease is
mainly driven by favorable reserve development in the aircraft
residual value insurance business. AGRO’s expense ratio, while
still high, has come down significantly in 2023 due to an increase
in earned premium from guarantee fees. The high combined ratio has
affected AGRO’s overall operating performance. AGRO has low net
returns on equity due to its under-utilization of capital and the
opportunistic deployment of capital to new non-financial guaranty
businesses.
AM Best assesses AGRO’s business profile as neutral. The
company’s life financial reinsurance program continues to exhibit
risk profiles with very low loss probability. In 2023, several new
lines of business were added, including a credit default swap on
pooled corporate credits, non-payment insurance on subscription
finance facilities, and international public finance financial
guaranty. AGRO has limited competition with a minimal number of
players in these lines of business. AGRO actively seeks
opportunistic growth in non-financial guaranty business, not in
chasing premium growth.
AGRO’s overall ERM assessment is appropriate, as the company
employs a robust ERM framework and infrastructure embedded across
the AGL group of companies, of which AGRO is a member. AM Best
considers AGRO’s risk assessment capabilities to be aligned
appropriately with its risk profile.
The ratings also take into consideration the benefits and
support AGRO receives from the AGL group of companies—a broader,
successful franchise—and its importance to AGL’s overall business
strategy and profile.
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please
view Guide to Best's Credit Ratings. For information
on the proper use of Best’s Credit Ratings, Best’s Performance
Assessments, Best’s Preliminary Credit Assessments and AM Best
press releases, please view Guide to Proper Use of Best’s
Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
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David Mautone Senior Quantitative Specialist +1
908 882 2098 david.mautone@ambest.com
Wai Tang Senior Director +1 908 882 2388
wai.tang@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com