AM Best has revised the outlooks to stable from negative and affirmed the financial strength rating of A- (excellent) and the long-term issuer credit ratings of “a-” (excellent) of the operating entities of Toronto-based Trisura Group and related entities.
The ratings reflect Trisura’s overall balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
In March 2023, AM Best revised its outlook for Trisura Group to negative from stable, after the insurer had revealed a CAD 81.5m one-time write-down of reinsurance recoverables in Q4 resulting from its fronting of a US property and casualty captive programme.
In April 2023, Captive Intelligence published a Long Read highlighting that Trisura Group’s write-down and subsequent stock drop had caught the fronting, and wider commercial market’s attention, but fears of a “race to the bottom” were not expected to impact traditional pure and group captive programmes.
The revision of the outlooks to stable from negative reflects improved ERM practices, policies and procedures around Trisura’s risk management of US captive reinsurance contracts.
As a result, Trisura has renewed all its ongoing programmes successfully and reduced its overall captive exposure.
AM Best said these changes have been effective and are reflected in the company’s improving operating performance.
AM Best noted that the ratings of First Founders Assurance Company (FFAC) remain unchanged following the news that Trisura has closed on the acquisition of FFAC last month.
FFAC is licensed currently in New Jersey and New York but will expand licensing to all 50 states and the District of Columbia.
“The acquisition rounds out Trisura’s business profile as FFAC is a treasury licensed surety provider,” AM Best said.