A Bermuda-domiciled start-up life insurer which plans to provide protection and savings products to high net worth individuals has won a strong Preliminary Credit Assessment (PCA) from a global rating agency.

AM Best has assigned Triangle Life Insurance Co Ltd (Bermuda) with a Financial Strength Assessment of A- pca (Excellent) and a Long-Term Issuer Credit Assessment of a- (Excellent) pca.

The outlook assigned to both preliminary assessments is stable.

They reflect Triangle Life’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The very strong balance sheet assessment is underpinned by AM Best’s expectation that Triangle Life will maintain risk-adjusted capitalisation comfortably in excess of the minimum required for the strongest assessment, as measured by Best’s Capital Adequacy Ratio, over the five-year start-up period, supported by capital injections from committed shareholders.

Based on current projections, AM Best expects the company to report significant surpluses over local solvency requirements with reference to the Bermuda Solvency Capital Requirement over the same period.

AM Best considers dependence on reinsurance for some of the company’s products an offsetting factor to the assessment.

However, the programme, as currently structured, is deemed appropriate and is expected to be placed with reinsurance partners of excellent credit quality, which partially mitigates the associated risks.

Triangle Life’s adequate operating performance assessment is based on its well-defined business plans, its robust pricing process and product features designed to reduce product risk.

Operating losses are expected while the company scales its expense base, with profits unlikely to be reported before the fourth year of operations.

The company’s business profile benefits from the anticipated opportunity in the high net worth life insurance industry.

Execution risk, and in particular risks relating to market acceptance for a new entrant, are considered high, although they should be partially mitigated by the experience and track record of the management team.

The company’s digital offering, and absence of legacy systems, is expected to be a source of competitive advantage.

The company is expected to implement best practices of risk management and governance. AM Best expects ERM capabilities to remain commensurate to the company’s risk profile over time.