Ratings agency AM Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit ratings of “a-” (Excellent) of Bermudian-based Canopius Reinsurance Limited and Canopius US Insurance Inc of Delaware.

Both entities are wholly owned subsidiaries of Jersey-domiciled Canopius Group Limited, the non-operating holding company of the Canopius group of companies.

The outlook of these credit ratings is stable.

The ratings reflect Canopius’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The ratings of Canopius US and Canopius Re reflect their strategic importance to and integration within the Canopius group, AM Best said.

Canopius’s balance sheet strength is underpinned by its very strong risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio.

The agency said significant capital contributions from new and existing shareholders in 2020 and early 2021 offset the impact of material Covid-19-related re/insurance claims and natural catastrophe losses.

Moderate internal capital generation is expected to support risk-adjusted capitalisation at the very strong level prospectively.

AM Best said Canopius has incurred underwriting losses in recent years, largely owing to the impact of natural catastrophe claims.

Results in 2020 also were significantly affected by Covid-19-related losses, driven by business interruption and event cancellation business lines.

However, overall performance is expected to show moderate improvement prospectively, as Canopius continues to decrease its exposure to natural catastrophe events. The group is expected to generate a profit this year.

AM Best said Canopius has a well-established business profile as a re/insurer in the Lloyd’s market, where it ranked seventh in terms of gross written premium in 2020.

In addition, the agency said, the group’s partnership with Samsung Fire & Marine Insurance Co Ltd, announced in 2019, is expected to support its expansion in the US and Asia-Pacific markets in the coming years.