AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” (Good) to Hildene Re SPC, Ltd. (Hildene Re) (Cayman Islands). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Hildene Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

Hildene Re’s very strong level of balance sheet strength is underpinned by its risk-adjusted capitalization being assessed at the very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR). Although assets are currently concentrated in trust preferred collateralized debt obligations, the company is expected to diversify investments over time to a broader array of structured securities. The asset portfolio is managed by experienced professionals of an affiliated entity. AM Best expects Hildene Re’s risk-adjusted capitalization to remain at the very strong level prospectively, providing a foundation for continued growth.

Hildene Re’s operating performance is assessed as adequate. As a relatively newly formed entity, longer-term profitability trends will still need to be evaluated. Currently, Hildene Re has flow treaties with two U.S. cedents, and several transactions in the pipeline.

Hildene Re is a Cayman Islands domiciled insurer formed in 2022, entering into an increasingly crowded offshore annuity reinsurance space. The company will focus on reinsuring single premium annuities and similar retirement products. The profile will limit exposure to complex liabilities and focus on spread generation through differentiated asset management capabilities.

The company’s ERM is assessed as appropriate. Some aspects of ERM are still being developed for Hildene Re. However, the company is already leveraging the risk-aware culture of an affiliated entity to help develop its long-term focus on ERM to support growth initiatives.

AM Best will closely monitor Hildene Re’s results, noting that negative rating actions could occur if there is a deterioration in balance sheet strength metrics. A trend of operating performances that fall short of the company’s plans could also result in negative rating actions. Negative rating actions may also occur if ERM does not mature as AM Best expects. While unlikely in the near term, positive rating actions could occur if the company successfully executes its business strategy over time.

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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