AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent) of Bermudian-based Legal & General Reinsurance Company No 2 Ltd.

The outlook of these credit ratings is stable.

L&G Re 2 is an indirect subsidiary of Legal & General Group Plc and commenced writing business in 2021.

The ratings reflect L&G Re 2’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.

The agency said the ratings also factored in lift from L&G due to L&G Re 2’s importance to the group as a vehicle to compete and expand in pension risk transfer markets outside the United Kingdom and United States, as well as the financial and operational support it receives from its parent.

L&G Re 2’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, that AM Best expects to be maintained at the strongest level.

L&G has injected C$315 million of capital into L&G Re 2; further capital injections are expected over the coming years to support business growth.

As per AM Best criteria, the agency said, L&G Re 2 was considered a start-up operation and its adequate operating performance assessment considered the company’s ability to execute its business plan.

AM Best said it expected L&G Re 2 to selectively grow a profitable portfolio of Canadian PRT business over the medium term.

It added that the company was expected to benefit from L&G’s knowledge and expertise in the PRT business, as well as the group’s investment platforms and risk management oversight.