Bermudian-based reinsurer Group Ark Insurance Ltd has been assigned a financial strength rating of A (Excellent) by AM Best, the global credit rating agency.
GAIL was also assigned a long-term issuer credit rating of “a”.
AM Best said the outlook assigned to those credit ratings is stable.
The agency said the Bermudian operation is a wholly-owned subsidiary of Ark Insurance Holdings Ltd, the non-operating holding company of the Ark group.
AM Best said: “The ratings reflect Ark’s consolidated balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management, and are based on the group’s five-year business plan.
“In addition, the ratings reflect GAIL’s strategic importance to Ark. GAIL is the group’s Bermuda-based reinsurer, which provides reinsurance of the group’s Lloyd’s corporate member and will write third-party reinsurance business over the business plan period.”
AM Best added: “The very strong balance sheet strength assessment reflects Ark’s consolidated risk-adjusted capitalisation, which is projected to be above the minimum required for the strongest assessment over the five-year business plan, as measured by Best’s capital adequacy ratio.
“Capitalisation is supported by a $605 million capital injection from White Mountains Insurance Group, Ltd, completed on January 1 2021. WTM also has committed to contribute up to an additional $200 million of equity capital to Ark over 2021. The Ark group will have material exposure to catastrophe risk, which is considered a partially offsetting factor, although AM Best expects this risk to be managed through the appropriate use of reinsurance and robust exposure management.
“The adequate operating performance assessment considers the group’s five-year business plan, and Ark’s robust underwriting performance track record at Lloyd’s. AM Best expects Ark to maintain good technical return metrics over the underwriting cycle, notwithstanding the execution risk associated with its planned scale up.
“Ark’s neutral business profile assessment is reflective of its profile at Lloyd’s, and its current and projected diversified underwriting portfolio. Ark benefits from experienced and stable management and underwriting teams, which serve to mitigate partially the execution risk associated with the material scale up of current operations.
“AM Best expects Ark to appropriately leverage its established ERM framework within its current platform to support business plan execution over the coming years.”