AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to Mereo Insurance Limited (Mereo) (Hamilton, Bermuda). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Mereo’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 reflect AM Best’s expectation that, based on Mereo’s business plan, the company will maintain a balance sheet strength assessment of very strong supported by its projected risk-adjusted capitalization being at the strongest level throughout the five-year initial forecast period, as measured by Best’s Capital Adequacy Ratio (BCAR). Initial capitalization in 2024 and retained earnings through the forecast period are expected to support Mereo’s premium growth, which is expected to be rapid in its early years, based on projections. The company’s capital is anticipated to be managed through the use of reinsurance and potentially third-party capital. Investment risk is projected to be low given its conservative investment portfolio, which will remain matched closely to the evolution of the liability profile, supporting stability in future balance sheet metrics.

The adequate operating performance assessment and the limited business profile assessment are based on Mereo’s business plan as presented to AM Best. The plan includes rapid premium growth in its initial years and improving operating profitability that supports an adequate operating performance assessment. Outlined in the plan is a portfolio composed of casualty and specialty business diversified by subcategories, geographies, and attachment points. Mereo’s senior management team is composed of individuals with extensive experience and strong track records in the industry. The limited business profile assessment, nevertheless, considers the execution risk faced by any start-up operation, in recognition of the customary challenges associated with gaining market acceptance in the casualty and specialty space, while remaining profitable. An ERM structure has been established initially and is expected to develop as the product risks complexity of the business evolves.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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