Fitch assigns A insurer financial strength rating to Bermuda life reinsurer Constellation Re

Fitch Ratings assigned an A insurer financial strength rating with a stable outlook to Constellation Re (Bermuda) Ltd, the Royal Gazette reported on 14 October. The Bermuda life reinsurer is part of US insurer Constellation Insurance Inc.

Constellation Re was formed in December 2024, licensed as a Class C insurer and capitalised with $250 million in common equity contributed by AuguStar Life Insurance Co, Constellation's primary operating company. Fitch treats it as a core entity of the group, sharing branding, management, systems, governance and risk management.

Fitch said Constellation Re is expected to replace the group's American onshore captives as the vehicle for existing and new life insurance liabilities. Management wants to expand the Bermuda operation into third-party reinsurance over time, the agency said.

No formal support agreements are in place, Fitch said, though it believes Constellation can and will support the subsidiary. The agency called a disposal unlikely given the company's strategic importance and the reserving, capital and cost advantages it provides. The rating is expected to move in line with the wider Constellation group.

Negative rating factors Fitch flagged include a deterioration in the group's business profile, lower capital ratios, weaker profitability and a material reserve charge in its legacy variable-annuity business.

Bermuda's place in US capital rules is a separate question. In September this publication reported that an NAIC memo instructed the Life Risk-Based Capital Working Group to develop a capital charge for cessions outside reciprocal jurisdictions.