AM Best has affirmed the financial strength rating of A (excellent) of Sirius International Insurance Corporation, the Sweden-based subsidiary of Bermuda re-insurer White Mountains.In addition, Best affirmed the issuer credit rating of “bbb” and the debt ratings of “bbb” on $400 million 6.375 percent senior unsecured notes, that are due in 2017 and “bb+” on $250 million non-cumulative perpetual preference shares of the Bermuda-based Sirius International Group Ltd.The outlook for all ratings remains stable.Risk-adjusted capitalisation for Sirius is expected to remain strong, supported by an increase in retained earnings, which are expected to benefit from the benign catastrophe activity experienced in 2012 to date.Sirius’ claims paying ability continues to be enhanced by a safety reserve, which in accordance with Swedish insurance regulations, can normally only be released to cover insurance losses, and is funded from the company’s cumulative retained pre-tax earnings.Sirius’ safety reserve at year-end 2011 amounted to SEK 9.6 billion.In 2011, Sirius’ consolidated pre-tax profit fell to SEK 0.4 billion.Technical performance was severely impacted by a number of large catastrophes during 2011.Those catastrophes included the Japanese earthquake and tsunami event, as well as the New Zealand earthquake, for which loss estimates as at second-quarter 2012 were some $72 million and $46 million, respectively.The major catastrophe losses contributed approximately 20 percentage points to the overall loss ratio.Mainly as a result of this, Sirius’ combined ratio increased above its five-year average of 90.2 percent to just above 100 percent.Following benign catastrophe experience during the first half of 2012, AM Best expects a strong return to underwriting profitability by year end, supported by stable investment returns.Sirius maintains a good business profile in the reinsurance market, writing business through an international network of branch offices.In 2011, Sirius’ gross written premiums decreased by around 20 percent, as a result of the restructuring as well as the commutation of quota share treaties with Esurance Insurance Company, which is a former subsidiary of White Mountains that was sold to Allstate Corporation.Sirius continues to focus on shorter-tail lines, with property reinsurance currently generating approximately half of net written premiums.