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AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of Convex Insurance UK Ltd. and Convex Re Ltd. Both entities are wholly owned subsidiaries of Convex Group Ltd., the Bermuda non-operating holding company of the group.
The ratings reflect Convex’s consolidated balance sheet strength, which AM Best assessed as very strong, as well as the group’s adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings factor in the strategic importance of Convex UK and Convex Re to Convex Group.
Convex UK is the group’s UK-based specialty re/insurer, while Convex Re is the group’s Bermuda-based reinsurer. In addition to writing third-party reinsurance, Convex Re provides intra-group reinsurance protection to Convex UK.
AM Best said Convex has demonstrated good market acceptance since its inceptionin 2019, exceeding US$1 billion of consolidated gross written premium in 2020, its first full year of operation.
In addition, it has successfully raised an additional US$1.5 billion of committed capital from new and existing investors, which brings the group’s total committed capital to US$3.2 billion.
The revision of the outlooks to positive reflects AM Best’s expectation that Convex’s underwriting portfolio will continue to grow and diversify successfully as the group develops its UK and Bermudian operations. This could lead to an improved business profile assessment.
Convex is expected to maintain risk-adjusted capitalization comfortably in excess of minimum required for the strongest assessment, as measured by Best’s Capital Adequacy Ratio (BCAR), taking into account AM Best’s additional capital requirements for new company formations.
The group’s balance sheet strength is supported by a conservative investment portfolio and good financial flexibility, said AM Best.
A partially offsetting rating factor is Convex’s material exposure to catastrophe risk and its dependence on reinsurance to manage this risk, the ratings agency continued.
Source: AM Best