AM Best Affirms Credit Ratings of Somers Re Ltd. and Its Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) of Somers Re Ltd. (Bermuda) and its subsidiaries: Watford Insurance Company Europe Limited (Gibraltar); Watford Specialty Insurance Company (New Jersey); and Axeria IARD (France). In addition, AM Best has affirmed the Long-Term ICR of “bbb-” (Good) of Somers Group Holdings Ltd. (Somers) (Bermuda), the group’s holding company. The outlook of these Credit Ratings (ratings) is positive.

The ratings reflect Somers’ balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Somers had the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), as of year-end 2024. The group’s capitalization and overall balance sheet strength continue to show improvement, with capital growing from continued underwriting profitability and favorable net investment income. Partially offsetting the group’s increasingly stronger balance sheet is continued adverse reserve development driven by legacy U.S. casualty business. This is, however, expected to improve as Somers’ reserve base includes more favorably performing shorter tail business written in recent years.

Somers has a developed global reinsurance and insurance platform. Business is sourced and underwritten primarily through contracts with Arch Capital Group Ltd. and its entities, which also provides the core functions for the group’s underwriting operations. Historically, the group has focused on medium- to long-tailed lines of casualty business; however, more recently, the group has diversified into higher margin but more volatile short-tailed lines of business.

The positive outlooks stem from the group’s de-risked investment portfolio, which historically included leveraged loans and subprime credit assets and is now almost entirely investment-grade invested assets. Additionally, underwriting performance has been trending in a favorable direction over the past five years and the group first achieved underwriting profitability in 2023, which continued in 2024. Profitable or breakeven underwriting, coupled with low-volatility investment income, is projected to be accretive to the group’s capital position and support enhanced balance sheet strength.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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