AM Best confirms the credit ratings of Barents Re Reinsurance Company, Inc. and its subsidiary

0

MEXICO, December 17, 2021– (BUSINESS WIRE) –AM Best confirmed the financial strength rating of A (excellent) and the long-term issuer credit rating of “a” (excellent) of Barents Re Reinsurance Company, Inc. (Barents Re) (Cayman Islands) and its subsidiary , Barents Reinsurance SA (Barents Re Lux) (Luxembourg). The outlook for these credit ratings (ratings) is negative.

The ratings reflect the strength of Barents Re’s balance sheet, which AM Best considers to be the strongest, as well as its strong operational performance, neutral business profile and appropriate management of corporate risks.

The negative outlook reflects the volatility of the company’s operational performance indicators over the past few years, as well as the uncertainty of its global business expansion. AM Best will remain attentive to the performance of Barents Re through its expansion initiatives. While stability is expected, failure to execute strategic plans successfully is likely to result in negative rating actions.

The rating assertions reflect Barents Re’s risk-adjusted capitalization at the highest level, as measured by Best’s capital adequacy ratio (BCAR) and geographic diversification. Ratings are limited by the changing regional composition of Barents Re’s portfolio and the uncertainty regarding the impact on the level of profitability of the company.

Barents Re Lux ratings reflect its strategic importance and the support it receives from Barents Re. Barents Re Lux is part of the Barents Re rating unit and is fundamental to the overall strategy of the group.

Barents Re provides parental guarantee and reinsurance support to Barents Re Lux. Barents Re Lux was planned to move to London, but in June 2021 Barents Re withdrew the request. According to the company, this was mainly due to the delay in the process and the negative implications this would have on Barents Re’s operations. The company is in the process of obtaining its branch license in the UK to operate under licensing. temporary until the end of 2023. Failure to obtain the UK branch license would put operational pressure on the company.

The business volume in 2020 increased by 66% year on year, mainly thanks to a quota share treaty on motor liability cases in Romania and Bulgaria. Overall, activities of European origin represent 88% of its portfolio, with the Middle East and North Africa region generating 10% and Latin America holding the remainder. The company relies on its diverse and comprehensive reinsurance program placed with reinsurers with a good level of safety, a key feature that Barents Re has adopted in order to prudently enter new business lines and regions.

Although the operational performance of the group has evolved over time towards a different structure, its current indicators still compare favorably with the market. In June 2021, the company demonstrated an improvement in the level of claims and administration costs, demonstrating resilience to current market conditions. Although there is volatility present in the company’s premium volume and the composition of the business portfolio, Barents Re has been able to deliver consistently positive operating profit over multiple underwriting cycles.

Barents Re’s risk-adjusted capitalization continues to reflect capital contributions in 2016 and 2017, as well as positive net results in recent years. The Company’s reinsurance program adequately covers exposures, and its net catastrophic event exposures do not represent a significant portion of its reported surplus.

Positive rating actions are not expected in the medium term. The factors that can lead to negative rating actions are the deterioration of the expected performance of the company in terms of profitability and capital generation. Negative-rated actions could also arise as a result of adverse developments in the company’s global business expansion impacting its business profile, or due to the breakdown of its corporate governance due to issues. regulatory or a violation of the control of its operational risks.

Barents Re Lux’s ratings will reflect the rating actions of its parent company, Barents Re.

This press release relates to credit ratings published on the AM Best website. For all rating information relating to the posting and relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this post, please see AM Best’s Recent Rating Activity webpage. . For more information on the use and limitations of credit rating reviews, please see Best’s Guide to Credit Ratings. For more information on the proper use of Best Credit Ratings, Best Preliminary Credit Ratings, and AM Best press releases, please see the Guide to Appropriate Use of Best Ratings and Reviews.

AM Best is a global credit rating agency, news publisher, and data analytics provider specializing in the insurance industry. Based in the United States, the company operates in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by AM Best Rating Services, Inc. and / or its affiliates. ALL RIGHTS RESERVED.

See the source version on businesswire.com: https://www.businesswire.com/news/home/20211217005498/en/

Contacts

Olga Rubo, FRM
Financial Analyst
+52 55 1102 2720, ext. 134
[email protected]

Christophe sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]

Salvador Smith
Senior Financial Analyst
+52 55 1102 2720, ext. 109
[email protected]

Jim peavy
Director, Communications
+1 908 439 2200, ext. 5644
[email protected]

Share.

Comments are closed.