AM Best puts the credit rating of reinsurers to the test | Insurance business America
What motivated the agency to submit a review?
reinsurance
By Jonalyn Cueto
AM Best has reviewed North End Re (Cayman) SPC (Cayman Islands) (NERC)’s financial strength rating of A- (Excellent) and long-term issuer credit rating of ‘a-‘ (Excellent) with evolving implications. The announcement came Thursday, just a year after the ratings agency affirmed the company’s creditworthiness.
The credit review follows Brookfield Reinsurance Ltd’s recent acquisition of American Equity Investment Life Holding Company (AEL). AM Best noted the need to evaluate the strategy for NERC, a subsidiary of Brookfield Reinsurance Ltd., after the acquisition.
In 2021, prior to Brookfield’s acquisition of AEL, NERC entered into a reinsurance agreement with AEL subsidiary American Equity Investment Life Insurance Company. Under this agreement, NERC agreed to underwrite up to $10 billion in fixed deferred annuities. According to a press release, NERC has operated this acquired business profitably for the past two years.
However, following completion of the acquisition, AM Best will review NERC’s role and strategic direction within the restructured company. The agency noted that credit ratings will continue to be reviewed with evolving implications until analysts are provided further clarity on the company’s strategy.
This status indicates that ratings could change based on the outcome of the AM Best rating. Stakeholders and industry observers will await further communications from AM Best assessing the strategic plans for NERC.
Brookfield Reinsurance Ltd., NERC’s parent company, is a public company focused on equity-based insurance and reinsurance services for individuals and institutions. NERC complements its sister company North End Re Ltd., which also began reinsurance operations in 2021. Another sister company, Brookfield Annuity Company, provides annuity risk transfer solutions in Canada. These companies are part of Brookfield Reinsurance’s broader strategy to expand its insurance and reinsurance footprint.
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2024-05-10 14:35:00
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