AM Best has assigned a financial strength rating of A- (Excellent) and a long-term issuer credit rating of “a-” (Excellent) to Bermudian-based Fed Re Ltd, the Class E insurer registered with the Bermuda Monetary Authority in September.

The ratings agency had earlier assigned a preliminary credit assessment to the company.

The outlook assigned to these latest credit ratings is stable.

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

The ratings also reflect AM Best’s expectation that Fed Re’s risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, will remain at the strongest level through the end of the business plan provided, through the end of 2028, supported by capital contributions as necessary.

AM Best expects capital expansion to come from a combination of organic growth and parental support. At this time, the company’s capitalisation is adequate to support its insurance and investment risks.

The agency expects Fed Re’s trend of profitable premium growth to continue, as management executes its business plans, including its expansion and diversification efforts.

Management has reported favourable early operating performance and expects earnings to be immediately accretive to capital based on its business plan.

Fed Re is a subsidiary of Federal Life Group Inc, and its ultimate parent, Insurance Capital Group LLC. ICG is an affiliate of Bain Capital, and Fed Re is an affiliate of Federal Life Insurance Company.

AM Best said Fed Re is expected to focus its reinsurance transactions primarily on multiyear guaranteed annuities from both multinational and domestic US-based carriers, fixed-indexed annuities, as well as generally lower-risk small-faced life insurance products.