With increasingly stronger earnings projected through 2027, Bermuda headquartered re/insurer Vantage Risk has been assigned an ‘A-‘ (stable) financial strength rating from S&P Global Ratings and its AdVantage third-party collateralized reinsurance platform has been heavily cited as a key lever for the business.S&P has assigned its ‘A-‘ long-term issuer credit and financial strength ratings to Vantage Group’s core operating insurance subsidiaries, Vantage Risk Ltd., Vantage Risk Specialty Insurance Co., and Vantage Risk Assurance Co., while also giving a ‘BBB-‘ long-term issuer credit rating to Vantage Group Holdings Ltd.S&P cites projections that gross premiums written will continue to increase to around $2.21 billion by 2027, with diversification within the underwriting businesses one driver.Alongside that, there is an expectation that the combined ratio will continue to improve to 92%-95% in 2026-2027, helped by that diversification reducing the catastrophe load, but also the way the AdVantage third-party capital platform has served to shift much of the nat cat exposure off balance-sheet.

It’s notable that the AdVantage platform, where Vantage Risk deploys third-party capital from investors through its AdVantage collateralized insurer class of company receives meaningful mentions within the rating analysis, demonstrating the benefits of an aligned insurance-linked securities (ILS) model in helping to manage catastrophe risk, while delivering earnings through fee income at the same time.Recall that, .ILS and the AdVantage platform is seen as foundational to the future of the company, providing access to deep and scalable capital to support the Vantage business priorities.

In the S&P rating analysis, the agency cites a three-pronged strategy at Vantage, of insurance, reinsurance and the Partnership Capital (AdVantage) fee-based income services.One key driver of positive results for the company has been the fee income generated through its Partnership Capital platform, S&P said.While one of the drivers of improved performance and the expectation that will continue is, “a strategic shift to transfer the majority of natural catastrophe exposure to AdVantage, resulting in lower natural catastrophe losses.” At the same time, the net fee income and profit commissions earned through AdVantage is also cited as a driver of improved expense efficiency as well.

The AdVantage platform has helped Vantage Risk scale and diversify further through leveraging its underwriting expertise in natural catastrophe risks to partner with institutional investors, and S&P noted the company “strategically shifted this catastrophe risk to third-party capital vehicles in 2023.” The AdVantage strategy has also been to counterparties, so has delivered a point of differentiation to the market as well.The highlighting of Vantage’s third-party capital strategy by S&P underscores the growing importance for re/insurers to identify aligned models to work with institutional capital on catastrophe risks, allowing its own balance-sheet capital to work harder on further diversifying into new business lines, while managing risk and augmenting earnings with the fee income generated.Tapping into investor appetites for catastrophe reinsurance linked returns has worked well for Vantage as its business has scaled and it is expected to play a core role for the company going forwards.

Greg Hendrick, CEO of Vantage Risk commented on the news, “We are proud to receive an A- (Stable) financial strength rating from S&P Global Ratings.This recognition reflects the strength of our balance sheet, the discipline of our underwriting, and the sustained momentum we’ve built across our diversified platform.“It’s a testament to the trust placed in us by our brokers, clients, and stakeholders — and to the exceptional Vantage team driving our success every day.”.

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