Premia Completes Its Fourth Major Transaction at Lloyd’s

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Posts by Victoria Knowles, Author at Premia

All posts written by Victoria Knowles, Author at Premia.

Premia Holdings Ltd. announced today that Premia Syndicate 1884 has entered into a Loss Portfolio Transfer Agreement with Hiscox Syndicate 33.  The subject portfolio consists of a diverse mix of business underwritten by Syndicate 33 during Years of Account 1993 to 2018.

The transaction is retroactively effective to January 1, 2022.  Acrisure Corporate Advisory & Solutions (“ARCAS”) served as placing broker for this transaction.

Bill O’Farrell, Group Chief Executive Officer of Premia, said: “This is Premia’s fourth major transaction at Lloyd’s since acquiring our Lloyd’s Managing Agency and syndicate in 2020 and we have the team, scale and appetite to do more. Delivering successful run-off solutions to participants in the vibrant Lloyd’s market is a core part of our business and it is a pleasure to add such an historic insurer, that traces its history back over 120 years at Lloyd’s, to our client roster.” 

Premia Syndicate 1884 is managed by Premia Managing Agency Ltd. and provides risk-transfer and run-off solutions for other Lloyd’s syndicates and capital providers.  Syndicate 1884 has assumed nearly $1.7 billion in reserves under Premia’s management.

Since its launch in 2017, Premia has acquired more than $3 billion in gross loss reserves across several transactions and has built a durable franchise with an operating platform that spans Bermuda, the US, the UK, and Continental Europe.

Contact

Premia Holdings Ltd.
Scott Maries, 441-278-9176
Chief Financial Officer
smaries@premiareltd.com

About Premia Holdings (www.premiaholdings.com ) 

Premia Holdings Ltd. is an insurance and reinsurance group focused on acquiring and servicing property and casualty insurance business in run-off.   With approximately $1 billion in managed capital, Premia is well equipped to provide compelling insurance and reinsurance solutions in the global property and casualty insurance run-off market.  In addition, Premia’s wholly-owned subsidiary, Alan Gray LLC, is a 34-year-old professional services firm with a blue chip client list and a strong, complementary fee business.  Alan Gray’s services include claim management, legal bill reviews, audits, data analytics and complex litigation analysis.

KBRA Affirms Ratings for Premia Reinsurance Ltd. and Premia Holdings Ltd.

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NEW YORK (July 20, 2022) – KBRA affirms the A insurance financial strength rating (IFSR) on Premia Reinsurance Ltd. KBRA also affirms the BBB+ issuer rating on Premia Holdings Ltd. as well as the BBB debt ratings on all of Premia Holdings’ subordinated notes. The Outlook for all ratings is Stable.

Key Credit Considerations

The ratings reflect Premia’s ongoing successful execution of its run-off business strategy. Over the past five years, Premia has acquired more than USD 3 billion in gross loss reserves across several transactions, including the acquisition of insurance regulated entities in the US, UK, Belgium, Luxembourg and Lloyd’s of London (AA-/Stable). Through a combination of retained earnings and a manageable amount of additional debt, Premia Holdings’ capital grew to USD 829.3 million at end-2021, up 22.4% over prior year end. KBRA believes that both the group and the lead operating company maintain strong risk-based capitalization with significant capacity to execute additional transactions over the medium term. Premia Holdings’ financial leverage was 29.8% at end-2021. KBRA expects the company to prudently source any additional debt capital to support planned growth. With fee income from Alan Gray LLC, the group’s claims management administrator, significant dividend capacity from Premia Re, the group’s lead operating company, and material interest expense savings from the refinancing of the company’s senior unsecured notes in May 2022, interest coverage on all outstanding debt is strong. With a proven track record of accessing needed capital from banks as well as the private debt and equity markets, Premia also has access to soft capital from its sidecar, Elevation Re (SPC) Ltd., and from its sponsor, Arch Capital Group Ltd. (NASDAQ: ACGL) via reinsurance support. KBRA believes that Premia has a comprehensive, and continually evolving, risk management framework. Extensive modeling and stress testing of individual transactions and the entire portfolio are performed to ensure that capital remains sound, liquidity is strong to pay liabilities when due, and regulatory requirements are met. KBRA believes that Premia operates under conservative risk tolerances and guidelines.

Balancing these strengths are increased competition and capital inflows into the non-life run-off market, partially offset by growing market demand for run-off solutions by active underwriters seeking to free up capital in order to grow their business in current attractive pricing environments. KBRA believes that despite the increased competition, Premia is well-positioned to capitalize on current market opportunities due to its size, infrastructure, and underwriting expertise. Premia is also exposed to potential adverse loss reserve development as KBRA believes that long-tail casualty is subject to a high risk of change due to evolving societal, legal and regulatory environments over the life of the claim settlement process. The current economic pressure from rising inflation adds further uncertainly to the eventual outcome of the claims settlement process.

Rating Sensitivities

Favorable capital trends, continued successful execution of its run-off business strategy, and favorable earnings trends as evidenced by the underlying economics of the transactions could generate a positive rating action. A significant change in profile or business strategy, material adverse loss development or realized investment losses, elevated financial leverage, or loss of a key member of the management team could result in a negative rating action.

Click here to view the report. To access ratings and relevant documents, click here.

Related Publications:

Analytical Contacts

Carol Pierce, Senior Director (Lead Analyst)
+1 (647) 731-3307
carol.pierce@kbra.com
Ethan Kline, Associate
+1 (646) 731-1278
ethan.kline@kbra.com
Peter Giacone, Senior Managing Director (Rating Committee Chair)
+1 (646) 731-2407
peter.giacone@kbra.com

Business Development Contact

Tina Bukow, Managing Director
+1 (646) 731-2368
tina.bukow@kbra.com

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.