Bermudian-based SWBC Re Ltd and its affiliate, Texas-based SWBC Property and Casualty, have been assigned ratings by AM Best.

The agency has assigned both entities a financial strength rating of A- (Excellent) and a long-term issuer credit rating of “a-” (Excellent).

The outlook assigned to these credit ratings is stable.

The ratings of SWBC PC reflect its 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.

The agency said SWBC PC was established in 2022 to underwrite general contractual liability policies directly, supporting debt cancellation programmes in response to growing demand over the past few years, and to eliminate its reliance on external fronting agreements.

AM Best said it expected initial capitalisation and retained earnings over the forecast period to support the company’s expected premium growth, but long-term capital was expected to be managed through the use of reinsurance with their affiliate, SWBC Re.

The Bermudian-based entity is a Class 3 insurer licensed and regulated by the Bermuda Monetary Authority.

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

AM Best said: “SWBC Re exhibits the strongest level of risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, and it is expected to remain at this level, supported by low-risk reserves, conservative investment portfolio and consistent profitability.

“The company has a strong history of underwriting profitability in the contractual liability insurance market, in addition to various other credit lines of business, which management plans to bring on to the balance sheet in the near to midterm.

“The business profile assessment is limited given low geographic diversification and concentration risk, mitigated by a strong senior management team with vast industry experience.

“SWBC Re has provided a detailed expansion plan, which projects significant growth in the near term. While much of this expansion includes affiliated accounts, some level of execution risk remains. AM Best will continue to monitor this expansion closely and respond if actual results materially differ from projections.”

The agency added: “ERM is supported by robust governance frameworks that monitors and reviews business risks.

“SWBC PC and SWBC Re benefit from the comprehensive risk management framework established by the ultimate parent, which has defined functions to oversee and validate key performance indicators across the organisation.”