A start-up led by veteran Bermudian insurance executive Brian Duperreault has been assigned a preliminary credit assessment by AM Best.

Mereo Insurance Ltd was assigned a financial strength assessment of A- pca (Excellent) and a long-term issuer credit assessment of “a-” pca (Excellent).

The outlook assigned to this PCA is stable, AM Best said.

Mr Duperreault is the chairman of Mereo Advisors, which is behind the new reinsurer.

Mereo, which is expected to begin operating this year, identifies Hamilton as its headquarters on the company’s LinkedIn page.

The Bermuda Monetary Authority has not yet issued a licence for the company to operate on the island.

In an interview with Insurance Insider when news first broke of his new venture, Mr Duperreault said about the company’s approach: “More important than anything will be underwriting, underwriting, underwriting.”

AM Best said the PCA reflects Mereo’s balance sheet strength, which the agency assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

AM Best said: “The PCA also reflects AM Best’s assessment that, based on Mereo’s business plan, the company will maintain a balance sheet assessment of very strong supported by projected risk-adjusted capitalisation at the strongest level throughout the five-year initial forecast period, as measured by Best’s capital adequacy ratio.

“Initial capitalisation in 2024 and retained earnings through the forecast period are expected to support premium growth, which is expected to be rapid in its early years, based on projections.

“Capital is anticipated to be managed through the use of reinsurance and potentially third-party capital.

“Investment risk is projected to be low given a conservative investment portfolio, which will remain matched closely to the evolution of the liability profile, supporting stability in future balance sheet metrics.”

The agency said the adequate operating performance assessment and the limited business profile assessment are based on Mereo’s business plan presented to AM Best.

AM Best said: “The plan includes rapid premium growth in its first years and improving operating profitability that supports an adequate operating performance assessment.

“Outlined in the plan is a portfolio composed of casualty and specialty business diversified by subcategories, geographies and attachment points.”