AM Best updates Third Point Re status post Sirius merger deal

Rating agency AM Best has placed Bermuda-based Third Point Re’s ratings under review with developing implications. The reinsurer's chief executive Dan Malloy said the move recognises the group's strategy of improving underwriting profitability.

AM Best said it had placed the re/insurer’s financial strength rating of A- under review, along with that of Third Point Reinsurance USA, following the announcement it will merge with Sirius International Insurance Group to form SiriusPoint.

AM Best noted the addition of the Sirius business is expected to add approximately $1.9 billion to Third Point Re’s $600 million in gross premium written. "The additional business not only adds size, which is expected to enhance Third Point Re’s market profile and add scale, but augments business diversification as Sirius has a larger global presence and has insurance operations in addition to its reinsurance platform.”

Third Point Re’s balance sheet strength is expected to remain strong despite the acquisition of Sirius, which maintains a higher level of financial and underwriting leverage and a significant amount of safety reserves moderating the fungibility of capital.

"Risk-adjusted capital should benefit further as TPRE's already reduced concentration in alternative investments will be a significantly smaller portion of total invested assets of the combined entity; and AM Best expects that a significant majority share of investments will be composed of investment-grade, fixed-income securities and equities that will act as a portfolio ballast," the agency added.

Third Point Re's chief executive Malloy said: "We welcome this move as we continue to deliver upon our strategy to improve the Company's underwriting profitability combined with the tremendous opportunities that we see ahead for SiriusPoint given our expanded underwriting platform and improving market backdrop which we are now better positioned to execute upon."