OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to Fed Re Ltd. (Fed Re) (Bermuda). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Fed Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The ratings also reflect AM Best’s expectation that Fed Re’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), will remain at the strongest level through the end of business plan provided, through the end of 2028, supported by capital contributions as necessary. AM Best expects capital expansion to come from a combination of organic growth and parental support. Currently, the company’s capitalization is adequate to support its insurance and investment risks. AM Best will continue to monitor the development and appropriateness of Fed Re’s investment portfolio, asset allocation, asset liability management, as the liabilities grow over time within the organization. Further, AM Best expects Fed Re’s trend of profitable premium growth to continue, as management executes on its business plans, including its expansion and diversification efforts. Management has reported favorable early operating performance and expects earnings to be immediately accretive to capital based on its business plan.
Fed Re is a subsidiary of Federal Life Group, Inc., and its ultimate parent, Insurance Capital Group, LLC (ICG). ICG is an affiliate of Bain Capital, and Fed Re is an affiliate of Federal Life Insurance Company (Fed Life). Fed Re is expected to focus its reinsurance transactions primarily on multi-year guaranteed annuities (MYGA) from both multinational and domestic U. S. based carriers, fixed-indexed annuities, as well as generally lower-risk small-faced life insurance products. The MYGA business will be sourced by a combination of flows from Fed Life, as well as lead generation for reinsurance transactions from ICG. An experienced management team supports Fed Re’s ability to meet expansion and profitability plans and capitalization targets.
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