AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Canopius US Insurance, Inc. (Canopius US) (Wilmington, DE) and Canopius Reinsurance Limited (Canopius Re) (Bermuda). Both entities are wholly owned subsidiaries of Canopius Group Limited (Canopius) (Jersey), the non-operating holding company of the Canopius group of companies. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Canopius’ balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings of Canopius US and Canopius Re reflect their strategic importance to and integration within the Canopius group.
Canopius’ balance sheet strength is underpinned by its risk-adjusted capitalisation that AM Best expects to be maintained at least at a very strong level in the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). Significant capital contributions from new and existing shareholders before the end of 2020 are expected to offset the negative impact on capital from COVID-19-related (re)insurance claims and support growth in underwriting risk as the group seeks to expand its premium base.
Canopius’ underwriting results have been negative in recent years owing to the impact of natural catastrophe losses. However, overall operating performance improved in 2019 due to a favourable investment result and lower catastrophe losses when compared to the 2017 and 2018 underwriting periods, following a change in the company’s risk appetite. Whilst 2020 results will be affected by significant COVID-19-related losses largely from business interruption and event cancellation lines of business, underlying business is expected to show improved performance metrics.
Canopius has a well-established business profile, as a (re)insurer in the Lloyd’s market, where it is expected to rank as one of the largest five syndicates following the acquisition of Amtrust at Lloyd’s Limited in 2019. In addition, a partnership with Samsung Fire & Marine Insurance Co., Ltd., announced in 2019, is expected to support the group’s expansion in the U.S. and Asian-Pacific markets in coming years.