Credit Suisse-backed Kelvin Re & Humboldt Re secure rating affirmations

AM Best has affirmed the ratings of Credit Suisse-backed Guernsey domiciled reinsurance vehicles, Humboldt Re and Kelvin Re, on their balance sheet strength.

Both the companies provide short-tail property catastrophe and specialty lines reinsurance, and derive their business using the capabilities of Credit Suisse’s Insurance-Linked Strategies team, an ILS hedge fund.

The rating agency has affirmed the financial strength ratings of A- (Excellent) of both Kelvin Re & Humboldt Re.

The ratings reflect their balance sheet strength, which AM Best categorises as strongest, as well as their adequate operating performance, limited business profile and appropriate enterprise risk management.

Both the companies have generated mostly negative underwriting results in their short history of operation, having been impacted by catastrophe losses in most years.

However, AM Best notes that these losses are reflective of their business model and are within their risk appetite. It said, both Humboldt Re and Kelvin Re have modified their underwriting exposures in 2020, which is expected to reduce the volatility in technical performance going forward. However, the successful execution of the strategy is subject to execution risk in AM Best’s opinion.

AM Best stated that despite Kelvin Re’s relatively high investment risk profile, the alternative assets produced a robust performance in the first quarter of 2020, despite volatility in global financial markets.

Humboldt Re’s risk-adjusted capitalisation declined at year-end 2019, due to an operating loss and higher underwriting risk requirements, but remained well-supportive of the strongest level.