AM Best has improved its outlook for Bermudian-based Canopius Reinsurance Ltd and Canopius US Insurance Inc of Delaware.

The two entities are wholly owned subsidiaries of Jersey-based Canopius Group Ltd, the non-operating holding company of the Canopius group of companies.

The ratings agency has revised the outlooks to stable from negative and affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit ratings of “a-” (Excellent) of the two subsidiaries.

The credit 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.

AM Best said that the ratings of Canopius US and Canopius Re reflected their strategic importance to and integration within the Canopius group.

It added that the revision of the outlooks to stable from negative reflected an improvement in Canopius’s risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, which was expected to have recovered to the strongest level as at year-end 2023, up from the strong level as at year-end 2022. Risk-adjusted capitalisation is expected to stabilise at a similar level.

AM Best said: “Canopius’s underwriting results showed continuing recovery in 2022, after underperforming during the period 2017-2020. AM Best expects the group to report good underwriting and investment performance for 2023.

“Prospectively, Canopius is expected to deliver solid operating profitability, benefiting from the actions management has taken over recent years to reduce exposure to natural catastrophe events, as well as a strong rating environment.”

The agency added that Canopius had a well-established business profile as an insurer and reinsurer in the Lloyd’s market, although it was subject to a strong level of competition.