AM Best has assigned a financial strength rating of A (Excellent) and a long-term issuer credit rating of “a+” (Excellent) to Cavello Bay Reinsurance Limited, a Bermuda-based subsidiary of Enstar Group Limited. The outlook for both ratings is stable.
The ratings reflect Cavello Bay’s balance sheet strength, assessed as very strong by AM Best, along with its strong operating performance, favorable business profile, and appropriate enterprise risk management.
Cavello Bay serves as the lead operating entity of Enstar, holding the majority of the group’s assets and liabilities.
Enstar has an established presence in the run-off insurance market and has a track record in managing claims in complex lines of business. In 2024, the company announced its acquisition by investment firm Sixth Street. As part of the acquisition, Enstar’s current business model is expected to remain largely unchanged.
AM Best has evaluated Enstar’s prospective capital actions and expects its balance sheet strength to remain at its current level through the close of the transaction and into 2025. If Enstar’s balance sheet position materially diverges from its stated plans, AM Best said that it would reassess Cavello Bay’s ratings accordingly.
In November, Cavello Bay Reinsurance announced that it had acquired a Bermuda-based Class 3B insurer and segregated accounts company.
The acquired reinsurer, which had US$66 million in shareholders' equity as of July 2024, underwrote property reinsurance on behalf of third-party investors between 2020 and 2023. The risk was assumed through retrocession agreements facilitated by a fronting carrier.
"This acquisition is our second transaction in the property ILS space in recent months, which we see as a growth market for legacy solutions. The deal structure eliminates collateral requirements, demonstrating the benefit of Cavello Bay’s strong balance sheet and financial strength rating,” Enstar CEO Dominic Silvester (pictured above) said.
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