AM Best affirms Lion Re ratings
AM Best has affirmed the financial strength rating of A and the long-term issuer credit rating of “a” of Bermuda-based Lion Reinsurance Company. The outlook of these ratings is stable.
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 subsidiary of ASSA Compañía Tenedora and is owned ultimately by Grupo ASSA, a financial services holding company publicly traded on the Panama Stock Exchange.
Lion Re is a captive Bermuda-based reinsurer assuming risks from ASSA Tenedora affiliates for property, auto, liability, marine, group life, health and miscellaneous businesses. AM Best recognises its strategic role in the group’s overall regional strategy; however, as it is a captive, Lion Re’s business profile is considered limited once compared with other commercial reinsurers.
Lion Re’s capital base is supportive of its risk-adjusted capitalisation, assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as its balance sheet assessment, which is very strong. Lion Re continues to perform an important role in ASSA Tenedora’s strategy as it consolidates operations in the Central American region by providing reinsurance capacity.
“Lion Re’s adequate level of operating performance results from its affiliated insurance companies in the Central American region, as well as its affiliation to Grupo ASSA, which provides synergies, operating efficiencies and financial support,” said AM Best. “The company reviews its underwriting guidelines constantly 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, it is not dependent on this type of revenue to achieve positive bottom-line results. As of December 2023, Lion Re’s consistent profitability was reflected in a 37% return-on-equity ratio. In 2024, the company remained profitable and in line with previous results.”
According to AM Best 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 the financial support of its parent. Factors that could lead to negative rating actions include a material loss of capital, which reduces the company’s risk-adjusted capitalisation to a level that does not support its ratings, or a diminished strategic importance of Lion Re to the group.
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