A.M. Best has assigned a financial strength rating of A (Excellent) and an issuer credit rating of “a+” to Sompo Japan Canopius Reinsurance AG, a wholly owned subsidiary of Canopius Group AG. The outlook assigned to both ratings is stable.
Zurich-based Sompo Japan Canopius Reinsurance AG has now received formal approval from the Swiss regulator, FINMA, and will begin writing business for Jan. 1, 2016, according to a statement released by Canopius Group, a subsidiary of Sompo Japan Nipponkoa Insurance Inc. (SJNKI).
As announced in September, the company forms part of a new integrated global business unit, which, along with Syndicate 4444, will write reinsurance business globally for Sompo Holdings under the shared brand, Sompo Canopius Re.
“The ratings of Sompo Japan Canopius Reinsurance AG reflect its supportive risk-adjusted capitalization and the expectation of good operating results,” said A.M. Best.
The company’s risk management and business profile benefit from its close integration with the specialty re/insurance operations of Canopius, the agency added.
The ratings also reflect Sompo Japan Canopius Reinsurance AG’s strategic importance to SJNKI as its specialist global reinsurance platform outside of Lloyd’s, as well as an unconditional liability guarantee provided by SJNKI, A.M. Best affirmed.
An offsetting factor is the company’s exposure to natural catastrophe losses, which is expected to contribute to volatile underwriting performance. This factor is partly mitigated by strong catastrophe risk management within Canopius, A.M. Best said.
Sompo Japan Canopius Reinsurance AG was incorporated in Switzerland on Nov. 23, 2015, following the redomicile of Canopius Reinsurance Ltd. from Bermuda. As of June 30, 2015, the company had shareholders’ funds of 484 million Swiss francs ($460.3 million).
SJNKI is expected to inject approximately 357 million Swiss francs ($339.5 million) of capital into Sompo Japan Canopius Reinsurance AG over the next four years to support growth, A.M. Best said.
“We’re pleased to receive regulatory approval and these strong ratings, which endorse the strength of our new company platform,” said Mike Duffy, chairman of Sompo Japan Canopius Reinsurance AG, commented, (The company also received an “A+” from Standard & Poor’s.)
“This entity will be an important component of our reinsurance strategy and, by complementing our Lloyd’s operations, will enable us to offer brokers and clients increased choice, reach and scale in our delivery of high quality specialist products,” Duffy added.
A.M. Best noted that the company will underwrite third-party reinsurance business through a network of branches in Switzerland, Asia, Bermuda and the United States, with property reinsurance initially representing the majority of premium income.
“Business generation will benefit from existing relationships and expertise within Canopius and the wider Sompo group. However, strong competition makes this a difficult time to enter the global reinsurance market,” A.M. Best said in its ratings announcement.
Source: A.M. Best and Canopius Group AG
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