A Class 3A insurer in Bermuda that assumes risks from a Colombian insurance company has been assigned ratings by AM Best.

The agency has assigned a financial strength rating of B++ (Good) and a long-term issuer credit rating of “bbb” (Good) to Mozart Insurance Ltd.

The outlook assigned to these credit ratings is stable.

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

AM Best said the stable outlooks reflect Mozart’s ability to report profitable results, allowing its capital base to strengthen over time.

Mozart was incorporated in Bermuda in 2019, and registered as a Class 3A insurer later that year.

The company is owned by Newport International Ltd, also incorporated and registered in Bermuda.

Mozart assumes risks from Compañía Mundial De Seguros SA, an insurance company based in Colombia, through retrocession agreements with Mundial’s reinsurers.

AM Best said retrocession programmes include proportional coverages under quota share arrangements provided to the auto line of business (third‐party liability and motor comprehensive insurance), lease tenant renting insurance for direct business on rent guarantees, leases of real estate spaces for residential and commercial buildings and personal accidents, which covers accidental death, disability and medical costs for drivers and occupants of public service vehicles.

The scale of the operation, coupled with the geographic concentration in a single country, are factors that limit Mozart’s business profile, the agency said.

Mozart’s risk-adjusted capitalisation stands at the strongest level, as measured by Best’s capital adequacy ratio.

The agency said: “Mozart’s capital base has been strengthened over the years through the reinvestment of earnings; however, dividend payments have limited its growth. The very strong assessment of Mozart’s balance sheet strength recognises the company’s adequately matched obligations and risk appetite.”

It added: “The adequate assessment of Mozart operating performance reflects the company’s ability to generate profitable results despite its recent creation.

“Mozart is susceptible to foreign exchange volatility due to the conversion of Colombian pesos, the currency in which all businesses are written, to US dollars, the reporting currency of Mozart in Bermuda.

“As of September 2023, the company reported a positive bottom-line result of $2.8 million, driven by premium sufficiency along with investment income.

“AM Best considers Mozart’s ERM to be appropriate, as it is well-integrated into its operations; risk appetite and tolerance are well-defined.”

The agency said positive rating actions could take place if Mozart is able to strengthen its capital base over time while maintaining the strongest level of risk-adjusted capitalisation through the consistent retaining of earnings.

It added that negative rating actions could occur should the company’s capital base erode, driven by a deterioration in operating performance or significant cash withdrawals.