Ratings agency A.M. Best said that it will keep the financial strength and issuer credit ratings of hedge fund backed reinsurer SAC Re under review with negative implications until the deal announced on Monday closes and the reinsurer becomes Hamilton Re.
A.M. Best’s ratings review is linked to the fall-out from the criminal charges that SAC Re’s parent and investment manager of its assets, hedge fund SAC Capital, has been facing. The rating agency said at the time it placed SAC Re under review; “The rating actions reflect A.M. Best’s concern with the business plan originally presented by SAC Re, which took into account invested assets being managed by S.A.C. Capital.”
Now, after it was announced on Monday that a group of investors led by reinsurance industry veteran Brian Duperreault would be buying SAC Re and changing the Bermuda Class 4 P&C reinsurers name to Hamilton Re once the transaction is completed, the outlook for the future of the reinsurance business looks much improved.
A.M. Best commented that the review remains in place until the transaction completes, saying; “A.M. Best recognizes that signing of the definitive agreement is a positive development for SAC Re, and should the transaction close as expected it will fully resolve the reputational risks previously identified.”
A.M. Best said that it still needs to conclude an evaluation of the new business plans and new investment strategy, with Two Sigma Investments lined up to take over investing the assets of the future Hamilton Re.
The sale of SAC Re to Hamilton Insurance Group Ltd. and the subsequent renaming to Hamilton Re is expected on the 31st December.
With Hamilton Re expected to leverage technology and data analysis within both its underwriting and investment strategy, thanks to the involvement of data driven investment firm Two Sigma, it is going to be interesting to watch how successful this proves as it does differentiate the new firm in the reinsurance marketplace.