Investing.com -- AM Best, the global credit rating agency, has assigned a Financial Strength Rating (FSR) of A (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “a+” (Excellent) to Bermuda-based Biglari Reinsurance Ltd. The credit ratings agency also assigned a stable outlook to these ratings.

In addition to Biglari Reinsurance, AM Best has also updated the ratings of First Guard Insurance Company and Southern Pioneer Property and Casualty Insurance Company. The agency removed the under review status for both companies and affirmed their FSR of A (Excellent) and the Long-Term ICR of “a+” (Excellent). AM Best also upgraded Southern Pioneer’s FSR from B++ (Good) to A (Excellent) and its Long-Term ICR from “bbb+” (Good) to “a+” (Excellent). The outlook for these ratings is also stable. These companies are collectively known as Biglari Re.

The ratings reflect Biglari Re’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile, and appropriate enterprise risk management (ERM). This balance sheet strength assessment is supported by the company’s capital adequacy, which is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The strength of the balance sheet is further enhanced by the financial flexibility and liquidity of its parent company, Biglari Holdings Inc., which is committed to supporting Biglari Re’s operating entities through capital maintenance agreements.

Biglari Re’s business will initially consist entirely of business assumed through whole account quota share reinsurance agreements with its two subsidiaries, First Guard and Southern Pioneer. The ratings of First Guard and Southern Pioneer were previously placed under review due to the implementation of these quota share reinsurance agreements. The affirmation of First Guard’s ratings and the rating upgrades of Southern Pioneer follow the completion of AM Best’s evaluation of the financial strength of Biglari Re. Their inclusion into the newly formed Biglari Re group reflects the companies’ larger capital base and enhanced business profile when viewed on a consolidated basis.

The assumed businesses of Biglari Re have a history of growing revenue and consistently positive operating performance metrics. Even though Biglari Re is a new structure, the underlying insurance entities have reported stability in their earnings, consistently showing their level of underwriting expertise in the markets they operate within, supporting a strong operating performance assessment.

The neutral business profile assessment reflects the centralization of operations, unified management, and improved product diversification both by line of business and geography. The management team is composed of individuals with extensive experience and tenure in its existing two insurance companies. AM Best views the group’s ERM as appropriate, as it continues to focus on improving its overall program, stress testing and governance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.