The credit ratings of Bermudian-based ASR Re Limited have been withdrawn by mutual agreement, AM Best has announced.

The ratings agency said it has affirmed the financial strength rating of B++ (Good) and the long-term issuer credit rating of “bbb+” (Good) of ASR Re, adding that the outlook of these credit ratings is stable.

However, AM Best said: “The ratings are now withdrawn by mutual agreement further to AM Best having communicated its intention to withdraw the ratings on October 6, 2023.”

The agency said the ratings reflect ASR Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

ASR Re is a wholly-owned subsidiary of ASR Holdings and is the primary risk carrier within the ASR group, a new entrant in the African corporate specialty reinsurance market.

ASR is owned by Helios Investment Partners, a private equity investor and manager.

AM Best said ASR Re is funded with approximately $49 million of capital, benefiting from two capital injections in 2021 and 2022.

The agency said it expects ASR Re’s risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, to be maintained at the strongest level over the medium term, supported by a conservative investment allocation and internal capital generation that will support future growth.

AM Best said an offsetting factor in the balance sheet strength assessment is the small absolute size, by international standards, of ASR Re’s capital and surplus.

However, it added that ASR Re’s small net line sizes and the good credit quality of its retrocession panel mitigate this factor.

In addition, ASR Re is exposed to high levels of economic, political and financial system risks, which are associated with operating in the African corporate specialty reinsurance market, although this is partially mitigated by geographic diversification.

AM Best said the adequate operating performance assessment considers ASR Re’s ability to achieve its targeted operating results over its initial start-up phase, while developing its market profile in the competitive African reinsurance market. Prospective earnings are expected to be primarily driven by underwriting profits from the company’s expanding portfolio, with modest investment income. Earnings volatility is expected to be reduced through diversification and prudent use of retrocession.

ASR Re is a Bermuda-domiciled reinsurer, underwriting African reinsurance business sourced by affiliated managing general agents that are owned by the ASR group.

In its initial years of operation, the agency said, the group is largely reliant on third-party capacity providers to write business.

As the business matures, the group is expected to continue diversifying its panel of capacity providers and expand its direct book of business.

AM Best said the group has a senior management and underwriting team in place that has good experience in the targeted classes of business and operating environment.

In AM Best’s view, this increases the likelihood of market acceptance and successful execution of the group’s business plan.