AM Best Assigns Credit Ratings To Golden Tree

June 28, 2020

AM Best has assigned a Financial Strength Rating of B+ [Good] and a Long-Term Issuer Credit Rating of “bbb-” to Golden Tree Reinsurance Limited [Golden Tree] [Bermuda]. The outlook assigned to these Credit Ratings [ratings] is stable.

The ratings agency said, “Golden Tree is a subsidiary of Iris Financial Services Limited [Iris Financial] and is owned ultimately by Springbrook Corporation B.V., a privately held holding company with diversified operations in insurance, financial services and real estate.

“The ratings reflect Golden Tree´s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management [ERM].

“Golden Tree was established initially in 2015 as a segregated portfolio company, and was licensed in 2019 as a Class 3A insurer under Bermuda laws to provide reinsurance capacity for commercial credit and credit life risks as part of the group´s retrocession cover, with a geographical exposure to Colombia´s insurance market.

“The ratings also reflect Golden Tree´s strong balance sheet assessment, sound operating performance and its affiliation to Iris Financial, which provides synergies and operating efficiencies, as well as an appropriate ERM framework. Offsetting these positive rating factors are the company’s concentration in one business line and the strong competitive environment in its target geographic market.

“Golden Tree’s capital base has strengthened over time as a result of its sound underwriting practices and capital contributions. In 2019, the company sustained profitability mainly through underwriting, enabling the company to generate a return on equity of 56.3%. AM Best expects Golden Tree to continue to play an important role in its group´s strategy while starting to provide reinsurance capacity to third-party commercial insurers, amid healthy growth prospects and consistent profitability. Investment income, driven by a more conservative strategy, is expected to support Golden Tree´s results further; however, the company is not dependent on this revenue to achieve positive bottom-line results.

“Factors that could lead to a rating upgrade or positive outlooks for Golden Tree include increased business diversification and consistent positive bottom-line results that strengthen the capital position of the company. Factors that could lead to negative rating action include a material loss of capital, whether derived from a substantial decline in profitability or aggressive dividend policy, which leads to a reduced level of risk-adjusted capitalization that does not support its ratings.“

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