AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) for both Lumen Re Ltd. and Nectaris Re Ltd., with stable outlooks for each.
Both Bermuda-based reinsurers were assessed on their risk-adjusted capitalization, operating results, and exposure to retrocession arrangements.
Lumen Re's balance sheet strength assessment is underpinned by its strongest-level risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR).
Although Lumen Re’s leverage, measured by the ratio of retained limits to equity, has risen, it remains at a low level. The reinsurer has also renewed its status as a reciprocal jurisdiction reinsurer in 37 US states for 2025. This status is expected to reduce operational costs and administrative requirements when transacting in those states.
Operating performance for Lumen Re is considered adequate. The company has continued its de-risking and re-underwriting strategy, which has resulted in a notably lower loss ratio compared to previous years.
Investment income has also improved since 2023 due to a higher interest rate environment. AM Best expects Lumen Re’s performance to remain favorable under current market conditions.
Nectaris Re Ltd., a subsidiary of Nectaris Holdings Ltd., operates a business model centered around retrocession. The company cedes all of its underwriting risk to Horseshoe Re II Limited, a segregated accounts platform funded by insurance-linked securities (ILS) managed by Leadenhall Capital Partners LLP.
Leadenhall is a subsidiary of Mitsui Sumitomo Insurance Company, itself part of MS&AD Insurance Group Holdings.
Nectaris Re’s reinsurance business originates largely from Lloyd’s Syndicate 2001 and MS Amlin AG (MS Reinsurance), both of which are ultimately owned by MS&AD. These ceded portfolios are collateralized at the one-in-1,000 aggregate exceedance probability (AEP) level, with the tail risk retained by the original ceding entities.
Business acquired from open market operations is collateralized at a level not less than the one-in-250 AEP, with Nectaris Re retaining the tail risk above that threshold. Horseshoe Re II holds all collateral, composed of cash and highly rated short-term assets, in trust accounts for Nectaris Re's benefit.
AM Best expects Nectaris Re’s risk-adjusted capitalization to remain at the strongest level over the next one to three years. Its balance sheet is supported by its liquidity and asset quality, although the reinsurer remains heavily dependent on third-party retrocession.
Meanwhile, S&P Global Ratings has reaffirmed Bermuda’s long-term sovereign credit rating at ‘A+’ and its short-term rating at ‘A-1’, maintaining a stable outlook for the jurisdiction.
In a report, S&P cited the steady performance of Bermuda’s insurance industry and the government’s rollout of a 15% corporate income tax on large multinational companies, introduced in January 2025.
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