AM Best has assigned a financial strength rating (FSR) of A- (Excellent) and an issuer credit rating of "a-" to new Bermudian reinsurer New Castle Re.
The ratings agency said both ratings have been assigned a stable outlook.
New Castle Re will be capitalized with $500m and plans to provide property-per-risk, workers' comp catastrophe and terrorism coverage in addition to its core property catastrophe line of business.
The new reinsurer is led by Christopher R. McKeown, formerly president and chief executive officer of ACE Tempest Reinsurance and is currently president and chief executive officer of CIG Reinsurance (CIG Re), Citadel's existing insurance franchise.
AM Best said the initial rating reflects New Castle Re's solid capitalisation, experienced management team as well as financial and administrative support provided by its investors, Citadel.
The ratings agency said the initial rating assignment of New Castle Re also reflects the company's ability to meet the agencies stricter risk-based capital requirements for property catastrophe companies.
AM Best warned that it anticipated New Castle Re will be challenged by increased competition from both established companies and potential new start-ups seeking to enter the industry.
It added that the additional capacity brought to the market could dampen expected returns if pricing of reinsurance coverage fails to meet anticipated levels.
