AM Best places reinsurer’s credit ratings under review

AM Best has placed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent) of North End Re (Cayman) SPC (Cayman Islands) (NERC) under review with developing implications. The announcement was made on Thursday, just a year after the credit ratings agency affirmed the credit ratings of the company.

The credit ratings review follows Brookfield Reinsurance Ltd.’s recent acquisition of American Equity Investment Life Holding Company (AEL). AM Best cited the need to assess the strategy for NERC, a subsidiary of Brookfield Reinsurance Ltd., following the acquisition.

In 2021, before Brookfield’s acquisition of AEL, NERC entered into a reinsurance agreement with AEL’s affiliate, American Equity Investment Life Insurance Company. Under this agreement, NERC agreed to assume up to $10 billion of fixed deferred annuities. According to a news release, over the past two years, NERC has profitably managed this assumed business.

However, with the acquisition completed, AM Best is evaluating NERC’s role and strategic direction within the newly structured entity. The agency noted that until further clarity on the company’s strategy is provided to its analysts, the credit ratings will remain under review with developing implications.

This status indicates that there could be changes to the ratings based on the outcome of AM Best’s review. Stakeholders and industry observers will await further communication from AM Best as it assesses the strategic plans for NERC.

Brookfield Reinsurance Ltd., the parent company of NERC, is a public company focused on capital-based insurance and reinsurance services for individuals and institutions. NERC complements its sister company, North End Re Ltd., which also started its reinsurance operations in 2021. Another sister company, Brookfield Annuity Company, offers pension risk transfer solutions in Canada. These entities are part of Brookfield Reinsurance’s broader strategy to expand its insurance and reinsurance footprint.

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