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FOR IMMEDIATE RELEASE
LONDON - APRIL 29, 2019 05:04 PM (EDT)
AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to Convex Re Limited (Convex Re) (Bermuda) and Convex Group UK Limited (Convex UK) (United Kingdom). Both entities are wholly owned subsidiaries of Convex Group Limited (Convex), the non-operating holding company of the Convex group. The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect the strategic importance of Convex UK and Convex Re to the Convex group, Convex’s consolidated balance sheet strength, which AM Best categorises as very strong, as well as the group’s adequate operating performance, limited business profile and appropriate enterprise risk management. Convex UK will be the group’s U.K.-based specialty insurer and will be the principal contributor of premium income. Convex Re is the group’s Bermuda-based reinsurer. In addition to writing third-party reinsurance, it will provide reinsurance protection to Convex UK.
Convex is a new entrant in the competitive specialty (re)insurance sector. The group has been capitalised initially with approximately USD 1.6 billion of common shareholders’ equity, drawn from a USD 1.8 billion facility provided by a consortium of investors, including funds managed by Onex Corporation, a private equity investor and manager with a track record of investing in the insurance industry.
Convex is expected to maintain the strongest level of consolidated risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), through a forecast period of five years, taking into account AM Best’s additional capital requirements for new company formations. An offsetting factor in the balance sheet strength assessment is the planned material exposure to catastrophe risk and the dependence on reinsurance to manage this risk.
The adequate operating performance assessment considers the group’s five-year business plan, taking into account its competitive environment and heightened execution risk during the start-up phase. AM Best expects Convex to face strong competition from well-established peers in its target markets and be highly reliant on brokers to access business. The group has a senior management and underwriting team in place that has extensive experience in the targeted classes of business. In AM Best’s view, this increases the likelihood of market acceptance and successful execution of the group’s business plan.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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