AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Aspida Life Re Ltd. (Aspida Re) (formerly known as F&G Reinsurance Ltd.) (Bermuda). Aspida Re is a subsidiary of Aspida Holdings Ltd., which is an indirect subsidiary of Ares Management Corporation (Ares Management). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Aspida Re’s 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.
The ratings were placed under review with developing implications on Oct. 7, 2020, following the announcement that Fidelity National Financial, Inc (FNF) and its subsidiary Fidelity & Guaranty Life Insurance Company [NYSE: FNF], a leading provider of annuities and life insurance, had entered into a definitive agreement to sell F&G Reinsurance Ltd. to Aspida Holdings Ltd.
The rating actions follow the close of the transaction on Dec. 18, 2020, and include AM Best’s assessment of Aspida Re’s business strategy and capitalization, as well as risk management capabilities, going forward. AM Best expects that Aspida Re will maintain a very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), with the support of its parent and potential future investors as it executes its strategy of engaging in reinsurance flow transactions and block acquisitions of primarily interest-sensitive annuity business. AM Best notes that Aspida Re plans to utilize the investment expertise of its parent, Ares Management, a leading alternative investment manager with almost $200 billion of assets under management, to restructure the portfolio in order to improve investment yields. While AM Best acknowledges the favorable track record and extensive investment experience of Ares Management, exposure to less liquid and somewhat higher risk investments in Aspida Re’s general account are expected to be somewhat elevated compared with industry averages.
AM Best believes that Aspida Re maintains an adequate risk management framework for its current risk profile, which includes investment risk tolerances and prudent asset-liability management, as well as good risk controls and stress testing capabilities. However, as a new company, AM Best believes that execution risks remain and will continue to monitor Aspida Re’s ability to appropriately price future reinsurance treaties and block acquisitions.
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