A.M. Best Affirms Credit Ratings of Greenlight Capital, Re Ltd. and Its Subsidiaries
September 28 2017 - 12:11PM
Business Wire
A.M. Best has affirmed the Financial Strength Rating of
A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term
ICR) of “a-” of Greenlight Reinsurance, Ltd. (Greenlight Re)
(Cayman Islands) and Greenlight Reinsurance Ireland, Designated
Activity Company (Ireland). A.M. Best also has affirmed the
Long-Term ICR of “bbb-” of Greenlight Capital Re, Ltd.
(Cayman Islands) [NASDAQ: GLRE], the ultimate holding company. The
outlook of these Credit Ratings (ratings) remains stable.
The ratings of Greenlight Re are based on its strong
risk-adjusted capitalization, experienced management team and
strong enterprise risk management practices, as well as the overall
implementation of the business strategy. The ratings for Greenlight
Reinsurance Ireland, Designated Activity Company consider the
above-mentioned attributes and the support from Greenlight Re and
its ultimate parent, Greenlight Capital Re, Ltd.
These positive rating factors are partially offset by the
greater investment risk associated with its alternative investment
strategy and the challenges Greenlight Re faces writing profitable
business in current market conditions. Also detracting from the
company’s strengths is the investment risk associated with a
portfolio that is primarily composed of publicly traded equity
securities. However, this concern has been lessened as Greenlight
Re’s investment portfolio is actively managed and has performed
well over the longer term. Furthermore, more than 80% of the
invested assets are in highly liquid investments, and generally, no
position can be greater than 20% of invested assets. A.M. Best’s
rating approach involves assessing Greenlight Re’s risk
correlations across the enterprise by subjecting its capitalization
to concurrent adverse stress test events. The company’s
risk-adjusted capitalization withstands substantial amounts of
strain when subjected to these various catastrophe and investment
stress scenarios. A.M. Best’s expectation is that losses from
Hurricanes Harvey, Irma and Maria will be within Greenlight Re’s
risk tolerances, as well as within A.M. Best expectations, as A.M.
Best looks across the losses relative to the broader peer group.
A.M. Best will continue to monitor the developments associated with
these events and their impact on Greenlight Re. Should ultimate
losses materially deviate from expectations, A.M. Best will update
the market with regards to its rating opinion on Greenlight Re.
Greenlight Re operates as a broker market reinsurer writing a
combination of property, casualty and specialty reinsurance
business. The company has been successful in building its
underwriting team’s infrastructure and adding new business using a
partnership-oriented approach to underwriting. Additionally,
underwriting and investment assumptions are combined to develop a
risk profile on both sides of the balance sheet. Catastrophe
aggregate downside limits are in place and capped at the board
level. While Greenlight Re’s underwriting results have been below
expectations in recent years, A.M. Best recognizes the remediation
actions taken by the company’s management.
Factors that may contribute to positive rating actions include
improvements in the company’s underwriting results, continued lack
of material catastrophe losses and positive investment performance.
Alternatively, ratings could be negatively impacted by continued
adverse reserve development, coupled with negative investment
results and poor underwriting performance, which could collectively
contribute to a significant deterioration of surplus.
This press release relates to Credit Ratings that have been
published on A.M. 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 A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings. For information on the proper media use of Best’s
Credit Ratings and A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20170928006065/en/
A.M. BestVictoria Ohorodnyk, +1 908 439 2200, ext.
5326Financial
Analystvictoria.ohorodnyk@ambest.comorGreg Reisner,
+1 908 439 2200, ext.
5224Directorgreg.reisner@ambest.comorChristopher
Sharkey, +1 908 439 2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim
Peavy, +1 908 439 2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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