AM Best has affirmed the credit ratings of StarStone Insurance Bermuda Limited and Its European subsidiary.

The rating agency affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of StarStone Insurance Bermuda Limited and StarStone Insurance SE (SISE) (Liechtenstein). The outlook of these Credit Ratings is stable.

The ratings of SIBL reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).

The ratings of SISE reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate ERM.

Both companies’ ratings benefit from the support of their ultimate parent, Enstar Group Limited, which has a track record of providing them with financial assistance and operational support.

Both companies ceased writing new business in July 2020, and SIBL has since disposed of its US subsidiaries.

SIBL bears the liabilities of business written before the disposal date of these companies through reinsurance agreements. A wholly owned subsidiary of SIBL also ceased its participation in Lloyd’s Syndicate 1301 at the end of 2020 but retains the liabilities of the business written during the 2020 and before Lloyd’s underwriting years of account.

SIBL’s and SISE’s balance sheet strength assessments are underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), at year-end 31 December 2021. AM Best expects risk-adjusted capitalisation for both entities to remain at the strongest level over the medium term, based on their run-off plans.

SIBL’s balance sheet strength is supported by a relatively conservative investment portfolio and significant reinsurance protection that includes loss portfolio transfers (LPTs) provided by Enstar group entities. Although historical reserve volatility is an offsetting factor, the company has demonstrated positive reserve development on a gross and net basis in 2020, and on a gross basis in 2021 where a proportion of positive development was ceded to Enstar group affiliates through LPTs. SISE’s balance sheet strength is supported by a conservative investment portfolio and low underwriting leverage due to the high level of cessions to its parent company, SIBL.

The companies’ marginal operating performance assessments reflect their poor historical performance. Their limited business profile assessments consider their significantly reduced scale as a result of corporate disposals and the decision to cease writing new business.