Sirius unaffected by liquidity problems at parent CMIG: AM Best

AM Best has determined that Sirius is sufficiently independent of parent company China Minsheng Investment Group (CMIG) to be unaffected by reported liquidity issues at the Chinese company.

CMIG reportedly missed a bond payment last week prompting concerns over its wider liquidity and the affect this could have on Sirius.

But AM Best has quelled any such concerns stressing that the re/insurer is sufficiently ringfenced from any problems at its parent. It has a financial strength rating of ‘A’.

It noted that Sirius’s listing on the Nasdaq in November 2018, and subsequent compliance with the Nasdaq listing requirements, strengthened its governance and improved its transparency, reinforcing its independence from its ultimate parent, CMIG.

Following the listing, CMIG’s shareholding in Sirius was reduced, and Sirius promptly established a majority independent board of directors. Out of six board directors, only one represents CMIG.

AM Best also noted that the independence of the Sirius board of directors is protected by a shareholders’ agreement, valid until November 2021. Furthermore, Sirius and its rated subsidiaries operate in jurisdictions considered to have strong regulatory oversight, notably Bermuda, Sweden, the US and the UK.

It said that these elements shield Sirius’s financial strength from any potential adverse parental influence, in particular the risk of capital extraction from the company.

But it added that it will continue to monitor closely any developments regarding CMIG’s financial strength, and could take prompt action should the mechanisms in place to preserve Sirius’s integrity prove ineffective.

The commentary by AM Best applies to the Long-Term Issuer Credit Ratings of Sirius International Insurance Group (Bermuda) and Sirius International Group (Bermuda); and the Financial Strength Ratings of Sirius Bermuda Insurance Company (Bermuda), Sirius International Insurance Corporation (Sweden) and Sirius America Insurance Company (New York).