AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent) of Lumen Re Ltd. (Bermuda), with a stable outlook on both ratings.
The ratings reflect Lumen Re’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, limited business profile, and appropriate enterprise risk management (ERM).
Lumen Re’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains at the strongest level. Its liquidity, asset-liability management, asset quality, and use of internal capital models also support the balance sheet assessment.
Partially offsetting these rating factors is Lumen Re’s extensive use of retrocession. However, all retrocession is written on a fully collateralized basis, minimizing exposure to losses and credit risk. The company’s leverage, measured by the ratio of retained limits to equity, has been increasing but remains low.
Lumen Re has renewed its status as a Reciprocal Jurisdiction Reinsurer in 37 US states for 2026, reducing operational burdens and costs.
Regarding operating performance, AM Best assesses Lumen Re’s overall performance as adequate, noting that the loss ratio has declined significantly since 2022. Investment income has also improved since 2023, supported by a higher interest-rate environment. AM Best expects operating performance to remain adequate under current market conditions.
AM Best assesses Lumen Re’s business profile as limited because the company primarily writes catastrophe excess-of-loss contracts and a limited number of reinsurance protection programs with well-established cedants in developed markets. Product concentration is partially mitigated by diversification across regions, perils, and cedants.
On risk management, AM Best said Lumen Re’s ERM framework and governance support a systematic and controlled process for identifying, monitoring, and reporting underwriting and investment risks, as well as other risks affecting its reinsurance operations, according to the rating agency’s statement.
The AM Best affirmation comes amid notable activity by Lumen Re in the capital markets. In February, the company successfully priced its debut Photon Re Ltd. (Series 2026-1) catastrophe bond below guidance, securing $175 million in retrocessional protection against losses from North American peak perils, specifically US and Canadian hurricane and earthquake events, across two classes over a four-year term.
