A.M. Best Affirms Credit Ratings of Nova Casiopea Re S.A.

LONDON--(BUSINESS WIRE)-- A.M. Best has affirmed a Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” of Nova Casiopea Re S.A. (NCRe) (Luxembourg). The outlook of these Credit Ratings (ratings) is stable. Concurrently, A.M. Best has withdrawn the FSR of A- (Excellent) and the Long-Term ICR of “a-” of Casiopea Re S.A. (CRe) (Luxembourg) as a result of the company no longer continuing to conduct insurance operations.

The ratings reflect NCRe’s balance sheet strength, which A.M. Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

NCRe is a pure captive reinsurer of Telefonica S.A. (Telefonica), a Spanish multinational broadband and telecommunications provider with operations in Europe, Asia, and North, Central and South America. Operating globally, it is one of the largest telephone operators and mobile network providers in the world. In 2017, NCRe replaced CRe as Telefonica’s main reinsurance captive and has assumed the run-off liabilities of CRe. A.M. Best expects the company to generate EUR 56 million of gross written premiums during 2017, which is its first year of operation as Telefonica’s captive. NCRe is solely dependent on Telefonica for the generation of premium, as such premium volumes are constrained to the operations of Telefoncia. Technical results will principally drive profit generation, supported by small, albeit growing investment income over the medium term.

NCRe’s operations are managed by the same personnel that have managed CRe’s activities for more than 10 years. In A.M. Best’s opinion, the proven track record of NCRe’s management team has substantially reduced execution risk associated with the new captive. NCRe has implemented a risk management framework commensurate to its risk profile and is integrated closely with risk management activities of Telefonica.

NCRe’s balance sheet strength is driven by the strongest level of risk-adjusted capitalisation, supported by an excellent level of liquidity managed through conservative investment guidelines. A partially offsetting rating factor to the balance sheet strength is the level of natural catastrophe risk the company is exposed to, which is likely to cause volatility. However, volatility is mitigated partly by a highly rated retrocession panel.

A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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 A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20171221005727/en/

A.M. Best

Emily Thompson, +44 20 7397 0291

Associate Financial Analyst

[email protected]

or

Salman Siddiqui, +44 20 7397 0331

Associate Director, Analytics

[email protected]

or

Christopher Sharkey, +1 908-439-2200, ext. 5159

Manager, Public Relations

[email protected]

or

Jim Peavy, +1 908-439-2200, ext. 5644

Director, Public Relations

[email protected]

Source: A.M. Best