AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of a- of Kelvin Re Limited (Kelvin Re) (Guernsey). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Kelvin Res balance sheet strength, which is categorised as strongest by AM Best, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
Kelvin Res balance sheet strength is underpinned by the strongest level of risk-adjusted capitalisation and a flexible retrocession programme, which minimises counterparty credit risk. Capital requirements mainly are driven by Kelvin Res exposure to catastrophe risk; however, to absorb the volatility of these risks, the company maintains a high level of capital. AM Best expects prospective balance sheet strength to remain at the strongest level as the company expands its portfolio.
Kelvin Re is projecting more than USD 200 million in gross written premium in 2018, as it underwrites a globally diversified insurance portfolio with a heavy bias toward catastrophe-exposed business lines. The company anticipates reporting a technical profit for 2018, despite global catastrophe losses during the second half of the year and reserve strengthening from the 2017 North American hurricanes. AM Best expects Kelvin Res combined ratio for 2018 to be between 95% and 100%, compared with a combined ratio of 124% in 2017.
Kelvin Re has developed an appropriate ERM framework, which centers on advanced modeling capabilities and flexible retrocession arrangements to manage underwriting risk. Due to its changing profile, the company also performs regular stress testing to ensure that its capital position remains supportive. In addition, the company utilises the expertise of specialist third-party investment advisers to manage its hedge fund exposures.
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