AM Best, a global credit rating agency specializing in the insurance industry, has assigned credit ratings to Somerset Life Reinsurance Ltd. (Somerset Life Re), a new Bermuda-based reinsurance company. The firm received a financial strength rating of A (Excellent) and a long-term issuer credit rating of “a” (Excellent), both with a stable outlook.
The ratings reflect several key factors, including Somerset Life Re’s solid financial position, adequate operating performance, and appropriate enterprise risk management, according to AM Best. The company is a subsidiary of Somerset Reinsurance Ltd. and has secured special status as a US taxpayer under Section 953(d), enabling it to attract a broader range of clients.
As a startup, Somerset Life Re is expected to rely on its parent for services while it expands. Management, with extensive industry experience, plans to pursue reinsurance opportunities with low to moderate risk through direct channels, brokers, and strategic partnerships. Although the company may face near-term earnings challenges from new business, it is expected to make a meaningful contribution to its parent’s earnings in the medium term.
AM Best noted that the subsidiary benefits from strong ties to its parent. The new company is expected to strengthen Somerset Re Group’s ability to provide reinsurance solutions to offshore insurers seeking to transact with a US taxpayer. Its operations are fully integrated and co-sourced with its parent, creating a seamless partnership.
The stable outlook reflects AM Best’s expectation that Somerset Life Re will maintain sufficient risk-based capital to support its growth strategy as it further integrates with Somerset Re Ltd.
The announcement follows AM Best’s recent upgrade of Somerset Re Ltd.’s credit ratings. In August, the agency raised Somerset Re’s ratings to A (Excellent), citing successful execution of its business plan, including profitability and premium growth.
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