AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to Marco Re Limited (Marco Re) (Guernsey), which is a wholly-owned subsidiary of Marco Capital Holdings Limited (Marco) (Malta), the non-operating holding company of the Marco group. The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Marco’s consolidated balance sheet strength, which AM Best assesses as very strong, as well as the group’s adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings factor in Marco Re’s strategic importance to the Marco group. Marco Re is the largest of the group’s risk carriers and is expected to serve as its primary platform for legacy property & casualty (re)insurance business.

Marco entered Europe’s legacy (re)insurance sector in May 2020, with EUR 500 million of equity capital committed by funds managed by Oaktree Capital Management. Since inception, the group has acquired over EUR 700 million of legacy reserves spanning international (re)insurance markets. In addition to its portfolio of acquired legacy reserves, the group has a growing insurance services division that provides a range of management and technical services to the Lloyd’s and London markets. Marco has a senior management team with extensive experience in its target business area and an experienced board of directors that participate in key decision making.

Taking into account the group’s business plans, Marco is expected to maintain the strongest level of consolidated risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). The group’s balance sheet strength is safeguarded by several off-balance sheet protections, which materially reduce reserving risk. AM Best considers that there is heightened execution risk as the group looks to scale up its book of legacy reserves through new transactions, which could potentially generate volatility in risk-adjusted capitalisation.

Marco has achieved good performance since its inception and has demonstrated sound risk selection. AM Best expects Marco’s performance to be robust over the longer term, albeit subject to potential volatility due to the nature of legacy operators. The group’s insurance services division provides a steady source of fee income and diversification to its earnings profile. While AM Best views mispricing risk as significant, this is mitigated by Marco’s robust due diligence process, which includes detailed stress testing and oversight and challenge from its board of directors.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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