of its Bermuda domicile, an insurance rating agency has said.

Bermuda reinsurer AFC Re Ltd. has obtained an AM Best Co. rating of B (Very Good), a reflection of the strong capitalisation of $100 million and the commitment and support of its parent company, AFC Holdings Ltd.

Best said the rating, however, also reflects the uncertainties associated with the start-up of the company's operations.

AFC Re concentrates on providing reinsurance capacity to traditional life and annuity markets globally.

But in the near term, its strategy is to develop relationships with affiliated, and several large life and annuity, insurers.

AM Best expects the company "to achieve strong profits because of the favourable operational and tax attributes afforded to Bermuda companies -- despite the highly competitive nature of the life reinsurance market.'' Best said the rating also reflects the experience of its management team and the rating agency's expectation that the company will continue to develop strong relationships with prominent US and international underwriters of life and annuity products.

The firm's asset portfolio management strategy, designed to produce stable, long term results that are aligned with the reinsurer's cash flow requirements, is also believed to be contributory to the foundation of the company's future success.

AM Best said it is expected that AFC Re will maintain a risk-adjusted capital of at least 250 percent of the National Association of Insurance Commissioners action level.

AFC Re is considered to be well capitalised, with few liabilities, and an expectation of remaining debt free, exclusive of financial leverage for investment purposes for its first five years of operation.