AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent) of Bermudian-based Lion Reinsurance Company Ltd.

The outlook of these credit ratings is stable.

Lion Re is a subsidiary of ASSA Compañía Tenedora, SA, and is owned ultimately by Grupo ASSA SA, a financial services holding company publicly traded on the Panama Stock Exchange.

The ratings reflect Lion Re’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.

Lion Re is a Bermudian-based reinsurer assuming risks from ASSA Tenedora affiliates for property, auto, liability, marine, group life (short-term), health and miscellaneous businesses.

Incorporated in Bermuda in 2011, Lion Re is a Class 3A insurer licensed and registered by the Bermuda Monetary Authority.

AM Best said it recognised the strategic role that Lion Re aimed to achieve in the group’s overall regional strategy; however, Lion Re’s business profile was considered limited given its accessibility to markets when compared with other commercial reinsurers.

The agency said Lion Re´s capital base was supportive of risk-adjusted capitalisation being assessed at the strongest level, as measured by Best’s capital adequacy ratio. Lion Re continues to perform an important role in ASSA Tenedora’s strategy as it consolidates operations in the Central America region by providing reinsurance capacity.

AM Best said: “Lion Re’s adequate level of operating performance results from its affiliated insurance companies in the Central America region, as well as its affiliation to Grupo ASSA, which provides synergies, operating efficiencies and guarantee support.

“The company reviews its underwriting guidelines consistently to improve the performance of its business segments that are deviating from targets.

“Investment income, based on a conservative strategy, continues to support Lion Re’s results; however, the company is not dependent on this revenue to achieve positive bottom-line results.

“In 2023, the company’s consistent profitability was reflected in a 36 per cent return-on-equity ratio.”

The agency added: “Factors that could lead to positive rating actions include a greater degree of perceived integration of Lion Re’s role within the group while maintaining its guaranteed support of its parent.

“Factors that could lead to negative rating actions include a material loss of capital that reduces risk-adjusted capitalisation to a level that does not support the ratings, or if the strategic importance of Lion Re to the group diminishes.”