AM Best assigns A- rating to Kelvin Re

AM Best has assigned a financial strength rating of A- (Excellent) to Kelvin Re (Guernsey), a start-up company providing short-tail property and specialty lines reinsurance.

The rating agency said the ratings reflect Kelvin Re’s strong capitalisation, diversified projected business profile within the natural catastrophe reinsurance market, experienced management and well-designed risk management function.

It added that challenges related to the tactical execution of its proposed business plan in a soft market and the increased investment risk brought on by a non-traditional investment strategy are offsetting rating factors.

Kelvin Re is a privately owned start-up company based in Guernsey, providing short-tail property and specialty lines reinsurance. It follows a non-traditional investment strategy with 50 percent of investments allocated to blue chip hedge funds.

“Kelvin Re’s risk-adjusted capitalisation is expected to be maintained at an excellent level, supported by moderate projected underwriting leverage, a reinsurance program of good credit quality and a contingent capital facility (Letter of Credit),” said the rating agency.

“Underwriting, reserving and risk management functions are outsourced to market-leading providers and the company’s board of directors is largely formed by individuals with relevant reinsurance industry experience.”