AM Best Affirms Brit Reinsurance Rating
AM Best has affirmed the Financial Strength Rating of A [Excellent] and the Long-Term Issuer Credit Rating of “a” [Excellent] of Brit Reinsurance [Bermuda] Limited [Brit Re] [Bermuda]. The outlook of these Credit Ratings [ratings] is stable.
A spokesperson said, “The ratings reflect Brit Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management [ERM]. The ratings also benefit from the implicit and explicit support of its intermediate parent, Brit Group Holdings Limited [Brit], and its ultimate parent, Fairfax Financial Holdings Limited [Fairfax] [TSX: FFH].
“Brit Re, which is domiciled in Bermuda, has acted primarily as an internal reinsurer for its affiliates, Lloyd’s Syndicate 2987 and Brit UW Limited. In 2024, Brit Re put in place a new growth strategy focusing on third-party business outside of Brit Group, to expand its property/casualty and specialty [re]insurance lines. The company continues to derive most of its premium from a quota share contract with Syndicate 2987.
“Brit Re’s very strong balance sheet strength assessment is supported by its historically profitable underwriting results and manageable premium growth. Liquidity measures are sound and supported by short-term, liquid holdings that are predominantly high-quality fixed income securities and cash.
“While the company’s risk-adjusted capitalization is maintained consistently at the strongest level, as measured by Best’s Capital Adequacy Ratio [BCAR], the overall balance sheet strength assessment of very strong also considers Brit Re’s material catastrophe exposure stemming from its Syndicate 2987 business and the limited fungibility of some of its invested assets, which support Lloyd’s operations. The very strong balance sheet strength assessment also reflects that capital growth is constrained by sizable dividend payments made by Brit Re to its intermediate parent within the Fairfax group. Though excess capital is regularly returned to the intermediate parent, Brit Re continues to maintain risk-adjusted capitalization within the strongest level. AM Best sees the combination of significant growth in Brit Re’s third-party business, if coupled with continued significant annual dividend payouts, as having the potential to reduce Brit Re’s risk-adjusted capitalization, as measured by BCAR. Nevertheless, AM Best expects Brit Re’s risk-adjusted capitalization to remain supportive of the overall very strong balance sheet strength assessment as third-party underwriting operations continue to grow.
“AM Best assesses Brit Re’s operating performance as adequate, largely based on the performance of its all-lines quota share on business written by Syndicate 2987, of which Brit Re assumes a 20% share of net premiums written. The variability of the syndicate’s business results has been offset by the profitability of the FAL stop-loss contract. Underwriting performance also benefits from Brit Re’s very low expense structure, which benefits from Brit’s economies of scale. Brit Re’s loss ratios are in line with other reinsurers with adequate operating performance assessments. While Brit Re has experienced years with overall underwriting losses, the five-year averages for underwriting performance are favorable. In the first nine months of 2025, Brit Re’s underwriting and investment results remained profitable.
“AM Best assesses Brit Re’s business profile as limited given the company’s concentrated business production, and the company’s ERM practices as appropriate due to the governance structure in place.
“The company benefits from being part of Fairfax, which maintains favorable financial flexibility, a strong liquidity position and a track record of supporting its [re]insurance subsidiaries. Therefore, Fairfax provides rating enhancement to Brit Re based on the implicit and explicit support Brit Re receives from its intermediate parent, in the form of capital support, business distribution channels and overall operational integration.”
