AM Best maintains focus on credit fundamentals of hedge fund reinsurers

Since the withdrawal of PaCRe Lt.’s financial strength rating and issuer credit rating at the company’s request, there has been considerable speculation in the market as to AM Best’s view on these hedge fund-sponsored reinsurers.

AM Best remains committed to rating these types of structures, which differ from a traditional reinsurance company primarily as a result of the investment strategy pursued and how that is balanced with the risks associated with underwriting activities.

Currently, AM Best maintains interactive ratings with six hedge fund reinsurers (HFRs). The rating process…

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