AM Best Assigns Credit Ratings to Fergus Reinsurance Limited

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” to Fergus Reinsurance Limited (Fergus) (Hamilton, Bermuda). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Fergus’ balance sheet strength, which AM Best categorizes as adequate, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.

Fergus was incorporated in Bermuda on June 11, 2008 and is registered as a Class 3A insurer under The Insurance Act 1978, as well as a segregated accounts company under The Segregated Accounts Company Act 2000. Fergus writes low severity, high frequency reinsurance programs with a focus on underwriting quality risk in a disciplined and diversified manner. The company currently has a small number of programs in its only active cell. While Fergus benefits from certain portfolio and geographic diversity, its business profile is considered limited.

Fergus experienced volatile operating performance from 2008-2017, when it operated as a family-owned company concentrated on a limited book of reinsurance programs. During the second quarter of 2018, Fergus was recapitalized with $10.8 million in equity investments, an amount that has increased to $29 million as of October 2019.

The operating performance assessment reflects the company’s historically volatile underwriting performance and future uncertainties regarding the execution of its long-term strategy. The company’s performance in 2019 was characterized by relatively low premium writings as it focused on raising additional equity and establishing disciplined processes for sourcing and underwriting programs in the cell, but it expects premium growth in 2020. Net investment income, albeit modest, is generated solely from interest on a conservatively invested asset portfolio.

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 Guide to 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.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.