AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa” (Superior) of Assured Guaranty Re Overseas Ltd. (AGRO) (Bermuda). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect AGRO’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

AGRO’s risk-adjusted capitalization is maintained at the strongest level, even though it has come down significantly from the prior year, due to growth in exposure related to existing business, as measured by Best’s Capital Adequacy Ratio (BCAR). AGRO’s shareholders’ equity increased in 2024, for the second straight year after a decrease in 2022, due to mark downs in its investment portfolio. The company’s strong liquidity position, conservative investment portfolio and well-positioned financial flexibility due to its affiliation with Assured Guaranty Re Ltd., the indirect parent, and Assured Guaranty Ltd. (AGL), the ultimate parent, as well as AGRO’s active capital management, provide support for the balance sheet strength assessment of strongest.

AM Best assesses AGRO’s operating performance as adequate based on its operating results, which continue to be driven primarily by investment income. The company’s loss ratio remained negative in 2022-2024, after being heightened in 2020-2021. The negative loss ratio has been mainly driven by favorable reserve development in the aircraft residual value insurance business. AGRO’s expense ratio, while still high, has come down significantly since 2022, due to an increase in earned premium from growth in existing business lines. AGRO has had low net returns on equity due to its under-utilization of capital; however, this has been trending upward as the company puts more of its balance sheet to work.

AM Best assesses AGRO’s business profile as neutral. The company’s exposures have increased significantly over the last year owing to growth in existing business lines, several of which have been added over the last two years. AGRO has limited competition with a minimal number of players in these lines of business. AGRO actively seeks opportunistic growth in non-financial guaranty business, not in chasing premium growth.

AGRO’s overall ERM assessment is appropriate, as it employs a robust ERM framework and infrastructure embedded across the AGL group of companies, of which AGRO is a member. AM Best considers AGRO’s risk assessment capabilities to be aligned appropriately with its risk profile.

The ratings also take into consideration the benefits and support AGRO receives from the AGL group of companies—a broader, successful franchise—and its importance to AGL’s overall business strategy and profile.

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.

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