Best puts ratings of Canopius US, Bermuda units on negative

Rating agency A.M. Best Co. Inc. on Friday changed its outlook for the A- financial strength rating of Canopius US Insurance Inc. and Canopius Reinsurance Ltd. from stable to negative, citing balance sheet pressures.

The underwriting results of the units of Canopius Group Ltd. recovered in 2021 from “underperformance” in 2017-2020, but their capital adequacy ratio fell to “strong” from “very strong,” as assessed by Oldwick, New Jersey-based Best.

The units are expected to report improved 2022 underwriting results but their overall results could be hit by unrealized fair value losses on fixed-income investments, a Best statement said.

“Although Canopius’ risk-adjusted capitalization is expected to improve significantly in the near term, which would alleviate the negative pressure on the ratings, a negative rating action is likely if this does not occur,” Best said.

A- is widely regarded as the lowest rating insurers can have and remain on many brokers’ secure insurers lists.