Newpoint Re in talks with 'better aligned' agencies after AM Best withdraws ratings

By Chris Munro

March 28 - (The Insurer) - AM Best’s decision to withdraw Newpoint Re’s ratings because of the alleged complexity of parent NFG’s asset structure is “a temporary challenge” according to the reinsurer as it confirmed talks with “better aligned” agencies and reiterated its financial strength.

On March 12, AM Best announced it had withdrawn the Newpoint Re’s financial strength rating of B-plus and long-term issuer credit rating of bbb-minus.

At the time of the withdrawal, the ratings were under review with the implications revised to negative from developing.

As AM Best explained, the FSR and long-term ICR reflected Newpoint Re’s “very strong” balance sheet strength, along with its adequate operating performance, limited business profile and marginal enterprise risk management.

The shift in the implications of the under review status to negative from developing reflected what AM Best said was the complexity of capital and asset structures of Newpoint Re and its parent NFG which had the potential to affect the agency’s view of the company’s balance sheet strength fundamentals.

“The withdrawal of the ratings is due to the complexity of NFG group’s asset structure, which prevents AM Best from continuing with its interactive rating process with (Newpoint Re),” the agency explained in mid-March.

Newpoint Re responded earlier this month by stating it was in discussions with other rating agencies with methodologies it believed would be "more suited" to assessing NFG's asset structure.

It followed this up on Thursday with a new statement detailing its financial position, and saying AM Best’s withdrawal was “caused by methodological constraints in assessing (Newpoint Re)'s parent company”, and “does not suggest any deterioration of the company's financial state”.

Indeed, Newpoint Re said AM Best “consistently recognized its strong balance sheet strength”.

“Though the AM Best rating withdrawal presents a temporary challenge, Newpoint Re’s financial trajectory remains strong,” the reinsurer stated.

As the company noted, its insurance revenue increased 53% year on year to $330.8 million in 2024, while its total assets grew 24% from 2023 to $689.4 million.

Total cash and investments stood at $317.0 million come 2024’s close, up 174% from the end of 2023.

In response to AM Best’s withdrawal of Newpoint Re’s ratings, the reinsurer noted it has initiated negotiations with other agencies that it said are better aligned with parent NFG’s asset structure and capital strategy.

“Due to AM Best’s inability to properly evaluate NFG SA’s unique capital and asset structure, the withdrawal of its rating was expected,” Newpoint Re said.

“Rather than risk misrepresentation, (Newpoint Re) is actively engaging with rating agencies that can provide a more precise assessment of its financial standing.

“(Newpoint Re) is fully committed to transparency, financial stability and delivering top-tier customer service,” the reinsurer added.

In a statement, Newpoint Re said its management views the transition from AM Best as an opportunity to secure a rating that more accurately reflects the reinsurer’s financial strength and market position.

“Although AM Best’s decision is not what we had hoped for, it does not change our core reality: (Newpoint Re) is financially stronger than ever,” said Keith Beekmeyer, NFG’s CEO.

“Our balance sheet, cash reserves and insurance revenue have all significantly increased, positioning us for sustained success.

“We are moving quickly to collaborate with rating agencies that are better suited to our corporate structure,” the executive added.

Further updates can be expected in the coming months, Newpoint Re said.