A.M. Best Co. has upgraded the financial strength rating (FSR) to A (Excellent) from A- (Excellent) and issuer credit rating (ICR) to “a” from “a-” of Greenlight Reinsurance, Ltd. (Greenlight Re) (Cayman Islands).
A.M. Best also has affirmed the FSR of A- (Excellent) and ICR of “a-” of Greenlight Re’s sister company, Greenlight Reinsurance Ireland, Ltd. (Ireland).
Concurrently, A.M. Best has upgraded the ICR to “bbb” from “bbb-” of Greenlight Re’s holding company, Greenlight Capital Re, Ltd. (Greenlight Capital Re) [NASDAQ: GLRE]. The ICR for Greenlight Capital Re is strictly based on the holding company’s methodology, since the company does not carry debt. The outlook for all ratings is stable.
The ratings for Greenlight Re are based on its excellent risk-adjusted capitalization, experienced management team and the disciplined implementation of its business plan. The ratings also recognize the company’s exceptional enterprise risk management as it aggressively manages risks on both sides of the balance sheet. These strengths are partially offset by the challenges Greenlight Re encounters with writing profitable business in a softening market and the leverage resulting from an investment portfolio that is primarily composed of publicly-traded equity securities.Greenlight Re operates as a broker market reinsurer writing a combination of property/casualty and specialty reinsurance business. The company has been successful building its underwriting team infrastructure and adding new business using its partnership oriented approach to underwriting. This underwriting approach allows Greenlight Re to focus on a small number of large relationships, which enables pricing and structuring on a deal by deal basis. The company’s underwriting and investment assumptions are combined to develop a risk profile on both sides of the balance sheet, while catastrophe aggregate downside limits are in place and capped at the board level. To date, Greenlight Re’s underwriting results are favorable, and its large surplus base supports the current and expected growth in premium volumes.