Somerset Life Re, a new reinsurance company domiciled in Bermuda and a subsidiary of Somerset Re, has received a Financial Strength Rating of A (Excellent) and a Long-Term Issuer Credit Rating of “a” (Excellent) from AM Best.
The ratings reflect the company’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.
Somerset Life Re’s section 953(d) U.S. taxpayer status gives it the flexibility to reach a broader client base. It is expected to initially rely on its parent. Somerset Re, for services as it expands its business profile.
With a management team that has extensive industry experience, Somerset Life Re plans to pursue new business through direct channels, brokers and strategic partnership.
Planned growth is moderately aggressive as the company is expected to seek reinsurance opportunities for products with low to moderate risk. The company is expecting earnings strain from acquired business in the short-term; however, over the medium-term earnings are projected to contribute measurably toward overall enterprise earnings.
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AM Best also anticipates that the parent company will aid in maintaining the risk-adjusted capital of Somerset Life Re if needed.
The ratings also highlight the strategic benefit of Somerset Life Re to its parent group. Its creation enhances Somerset Re Group’s ability to offer reinsurance solutions to offshore insurance entities that prefer to work with a U.S. tax payer.
Additionally, Somerset Life Re’s operating capabilities are fully integrated and co-sourced with its parent company for external functions.
“The stable outlooks reflect AM Best’s expectation that Somerset Life Re will grow risk-based capital to support its growth-oriented business plan, as it builds operational synergies through the sharing of services with its parent, Somerset Re Ltd.,” the rating agency concluded.
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