Enact Re receives A- credit rating from S&P

Enact Re receives A- credit rating from S&P | Insurance Business Australia

Reinsurance

Enact Re receives A- credit rating from S&P

Rating a testament to strong capital position, CEO says

Reinsurance

By
Kenneth Araullo

S&P Global Ratings has assigned an ‘A-‘ long-term financial strength and issuer credit rating to Enact Re Ltd, with a stable outlook.

The ratings for Enact Re are aligned with those of its parent company, EMICO, as Enact Re is considered a core subsidiary of EMICO.

Enact Re, an affiliated reinsurer of EMICO, provides quota share coverage for 12.5% of the net risk written, which helps to reduce EMICO’s potential capital requirements under the Government-Sponsored Enterprises Private Mortgage Insurers Eligibility Requirements (PMIERs).

The reinsurer is also expected to play a key role in EMICO’s strategy to diversify into adjacent lines of business.

Established in 2023, Enact Re operates as a Bermuda class 3A licensed reinsurer, with $500 million in capital provided by EMICO. The company is closely integrated with its parent, sharing management, operations, risk management, and compliance processes.

Enact Re and EMICO also share distribution channels, which include both banks and non-banks, as well as risk-share partners such as brokers, reinsurers, and Government-Sponsored Enterprises (GSEs).

The stable outlook for Enact Re reflects the outlook for its parent company, EMICO.

S&P Global Ratings indicated that it could lower the ratings in the next two years if Enact Re’s capitalization falls below the 99.95% confidence level on a sustained basis, if there is a weakening in underwriting discipline or a significant increase in risk, if the company’s capital and risk management strategy becomes overly dependent on reinsurance, or if economic stress results in higher-than-expected losses that impact capital or operating performance compared to peers.

Additionally, a downgrade could occur if the credit profile of Enact Re’s ultimate parent, Genworth, declines below ‘bbb-‘.

While S&P Global Ratings does not anticipate raising the ratings in the next two years, an upgrade could be considered if US economic and housing conditions improve and if Enact Re’s capitalization becomes significantly stronger, with a confidence level reaching 99.99%, supported by advanced risk management practices. An improvement in the company’s competitive position relative to peers could also contribute to a potential upgrade.

Rohit Gupta (pictured above), president and CEO of Enact, expressed satisfaction with the credit rating, noting that it reflects the company’s strong capital position and disciplined execution.

“This rating is a testament to our continued strong capital position and disciplined execution. Looking ahead, we’re committed to maintaining robust financial health and serving our stakeholders while delivering significant value for our shareholders,” Gupta said.

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