Assessment cites strong risk-based capital and solid operating results

AM Best has affirmed the financial strength ratings of A- (Excellent) and issuer credit ratings

(ICR) of “a-” of Flagstone Reinsurance Limited (Flagstone) (Hamilton, Bermuda) and Flagstone Reassurance Suisse SA (Flagstone Reassurance) (Martigny, Switzerland).

Additionally, AM Best has affirmed the ICR of “bbb-” of Flagstone’s parent, Flagstone Reinsurance Holdings Limited (the group) (Hamilton, Bermuda). The outlook for all ratings is stable.

The affirmation of the ratings reflect the group’s strong risk-based capitalisation, solid operating results to date and continued development of the organisation’s operating platforms as it matures through its start-up phase. The strong level of risk-adjusted capitalisation reflects AM Best’s stricter guidelines for property catastrophe companies and new formations. The affirmations also consider the group’s diversification into new territories and lines of business via strategic investments.

Additionally, the ratings reflect the group’s expertise in catastrophe modelling and its ability to leverage its operating efficiencies utilising a global platform.

Partially offsetting these positive rating attributes is the group’s unique investment strategy utilising an in-house portfolio optimisation model, which has not yet been tested over a significant period of time. However, investment results to date indicate the model is performing as expected in minimising volatility. Further offsetting these positive attributes is the competitive nature and soft market trading conditions in the group’s core property catastrophe lines of business. Despite these challenging market conditions, the outlook reflects the expectation that operating results and risk-adjusted capitalisation will continue to be supportive of the current rating levels.