Results reflect balance sheet and operating performance
By Kenneth Araullo
Dec 07, 2023 ShareAM Best has reaffirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent) for Legal & General Reinsurance Company No. 2 Limited (L&G Re 2), a Bermuda-based reinsurer. The outlook for these ratings is classified as stable.
L&G Re 2, which commenced operations in 2021, is an indirect subsidiary of Legal & General Group Plc (L&G). The ratings reflect the company’s strong balance sheet, characterized by AM Best as very strong, along with adequate operating performance, a limited business profile, and appropriate enterprise risk management.
The ratings also incorporate the strategic importance of L&G Re 2 to the L&G group, particularly in its role in pension risk transfer (PRT) markets outside the UK and the US, and the financial and operational support it receives from its parent company.
The foundation of L&G Re 2’s balance sheet strength is its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best anticipates this capitalization will be maintained at the strongest level.
L&G has invested CA$315 million into L&G Re 2, and further capital injections are expected in the upcoming years to facilitate the company’s business growth.
As a relatively new entity, L&G Re 2 is viewed by AM Best as a startup operation. Its adequate operating performance assessment considers the company’s capability to implement its business plan effectively. AM Best forecasts that L&G Re 2 will gradually build a profitable portfolio of Canadian PRT business in the medium term.
L&G Re 2 is poised to leverage L&G’s extensive experience and expertise in the PRT sector, as well as benefit from the group’s established investment platforms and risk management oversight.
In other news on the reinsurance front, the Reinsurance Group of America (RGA) has announced the establishment of Ruby Reinsurance Company (Ruby Re), a Missouri-based third-party life reinsurance company focusing on the US asset-intensive business.
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