AM Best has upgraded the financial strength rating to A+ (Superior) from A (Excellent) and the long-term issuer credit rating to “aa-” (Superior) from “a” (Excellent) of Swiss-based MS Amlin AG (MS Reinsurance), which has a key operating hub in Bermuda.

The outlook of these credit ratings is stable.

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

In addition, MS Reinsurance’s ratings benefit from rating enhancement, in the form of lift, due to support provided by its ultimate parent, MS&AD Insurance Group Holdings Inc, AM Best said.

It added that the rating upgrades reflect the additional explicit support that MS Reinsurance receives from Mitsui Sumitomo Insurance Company Ltd, in the form of a parental guarantee that was enacted recently.

MS Reinsurance is a direct subsidiary of MSI, which itself is a core subsidiary of MS&AD.

MS Reinsurance’s balance sheet strength is underpinned by its very strong risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, in 2022 and 2023.

AM Best said BCAR scores declined in recent years as a result of operating losses and strong premium growth but are expected to recover moderately and remain at least at the very strong level.

The ratings agency said: “Following the appointment of new management from 2020, a series of remedial measures have been taken to improve underwriting performance and lower volatility of MS Reinsurance’s portfolio. Strategic initiatives include reducing catastrophe exposure and exiting underperforming accounts.

“The results of these measures, combined with hard market conditions, became visible in 2023, when the company achieved a combined ratio of 96 per cent (as calculated by AM Best, based on Swiss Code of Obligations figures) or approximately 90 per cent under IFRS. Prospectively, MS Reinsurance is expected to report profitable and less volatile underwriting results.”

AM Best noted MS Reinsurance’s key operating hubs in Zurich, Bermuda and the United States, adding that the company is well-diversified by both line of business and geography.