AM Best has downgraded the financial strength rating to ‘A-’ (Excellent) from ‘A’ (Excellent) and the long-term issuer credit rating to ‘a-’ (Excellent) from ‘a’ (Excellent) of Evergreen Insurance, a Bermuda-based captive of Evergreen Group.
The rating downgrades reflect the captive’s business plan to cease underwriting new business starting from mid-May 2024. The outlook of these credit ratings is ‘stable’.
AM Best also assesses the company’s balance sheet strength as very strong, supported by its adequate operating performance, limited business profile and appropriate enterprise risk management.
On the other hand, the agency revises the company’s operating performance assessment to ‘adequate’ from ‘strong’ given that its top-line and bottom-line results are projected to drop materially in the next two years.
Additionally, AM Best changes the company’s business profile assessment to ‘limited’ from ‘neutral’ due to the planned reduction in business scale.
As a pure captive of Evergreen Group, Evergreen Insurance’s in-force underwriting portfolio primarily consists of marine, aviation and property risks related to the group’s operations.
The company has ceded the majority of its risk exposures to a panel of financially sound reinsurers and maintained a low retention ratio.
According to AM Best, its overall capital position and profitability have been stable over the past five years, owing to prudent underwriting practices, conservative reserving assumptions and long-term reinsurance relationships.
Furthermore, the agency assesses that the captive’s risk management is well-embedded into the group’s risk framework and is viewed as appropriate to support its risk profile.
