AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of North End Re Ltd. (Bermuda). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect North End Re Ltd.’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

North End Re Ltd.’s risk-adjusted capitalization is considered favorable, as measured by Best’s Capital Adequacy Ratio (BCAR). However, it is noted that volatility in balance sheet metrics is likely once more business is assumed, which is expected in the latter half of 2024. As operations ramp up, the company also is expected to utilize available internal and external revolving lines of credit to provide liquidity and maintain capital levels. To date, North End Re Ltd. has closed one transaction in third-quarter 2021, reinsuring $1.6 billion of fixed deferred annuities.

North End Re Ltd.’s parent, Brookfield Reinsurance Ltd. (Brookfield Reinsurance), is a publicly traded insurance and reinsurance company focused on providing capital-based solutions to insurance companies. Brookfield Reinsurance seeks capital-intensive business to leverage its asset management and sourcing capabilities, acquiring American National Group, Inc. in an all-cash transaction valued at approximately $5.1 billion in 2022. North End Re Ltd. geographically complements its sister companies, North End Re (Cayman) SPC, and Brookfield Annuity Company, which provides pension risk transfer solutions in Canada.

Slightly offsetting the favorable attributes of North End Re Ltd. and its greater organization are the high level of competition and the temporary realized investment losses caused by rising interest rates, which has impacted earnings negatively over the past two years. AM Best notes that while rising interest rates have caused losses to date, the enhanced yield in the company’s investments will be a favorable factor over the longer term. Furthermore, while the lack of new transactions in 2022 and 2023 have exemplified the competitive space North End Re Ltd. operates in, AM Best notes that the company was initially quick in establishing itself in the market, showing early success against competitors.

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