AM Best has assigned a financial strength rating of A- (Excellent) and a long-term issuer credit rating of “a-” (Excellent) to Bermudian-based Martello Re Ltd.

The outlook assigned to these credit ratings was stable.

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

The agency said Martello Re’s very strong level of balance sheet strength was underpinned by its risk-adjusted capitalisation being assessed at the strongest level, as measured by Best’s capital adequacy ratio.

AM Best said: “The company has broad investment capabilities, partnering with experienced asset managers. It recently closed on a second round of equity funding, raising $935 million of equity commitments from existing and new shareholders, adding to its current equity and credit facility capacity.

“AM Best expects Martello Re’s risk-adjusted capitalisation to remain at the strongest level prospectively, providing a foundation for continued growth.

“Martello Re’s operating performance is assessed as adequate. Although operating results were profitable in 2023, as a newly formed entity, longer-term profitability trends will still need to be evaluated.”

It added: “Martello Re is a life and annuity, Bermuda Class E reinsurer with a focus on managing longer dated run off liabilities.

“Currently, the company is reinsuring fixed annuity and fixed indexed annuity policies as well as pension risk transfer, issued by MassMutual or its subsidiary. There is also pension risk transfer business from another large US domestic cedant.

“The company’s ERM is assessed as appropriate, with a risk-aware culture and long-term focus that supports growth initiatives.

“There is a well-defined ERM framework in place that outlines specific risk appetite categories, with the seasoned management team monitoring and addressing risks quickly.

“A comprehensive risk register defines risks across the enterprise, with frequent stress testing as an integral element of its ERM framework.”

AM Best said it would closely monitor Martello Re’s results, noting that negative rating actions could occur if there was a material decline in risk-adjusted capitalisation or other balance sheet strength metrics, which no longer supports the very strong assessment.

A trend of negative operating earnings could also result in negative rating action.

It added that positive rating actions could occur if the company experiences a trend of increasing positive operating earnings and premium growth.