MEXICO CITY--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” to Eureka-Re SCC (Eureka) (Barbados). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Eureka’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The stable outlooks reflect AM Best’s expectation that Eureka’s strategy will continue to reflect a more stable financial performance in upcoming years, especially in regard to stabilization of the company’s operating performance.
Eureka, established in Barbados in 2009, is a Latin American regional reinsurer. The company underwrites mostly lower layers of facultative programs, originated through managing general agents. While most of the premium taken by the company is in Latin America, the company has been able to diversify internationally, underwriting almost 30% of its business outside the region. AM Best views Eureka’s business profile as neutral, recognizing the company’s capacity to take risks but also aware of the need to see the full evolution of the company’s strategy in terms of geographical diversification and overall corporate structure.
AM Best assesses Eureka’s balance sheet strength at the strongest level, as the availability and quality of its capital are well-positioned against the company’s risk profile. The company is subject to catastrophe events and has adjusted its retention and reinsurance program according to its experience, with a high quality panel of reinsurers. Investments are concentrated mostly in fixed income aimed to match insurance obligations, with a proprietary portfolio aimed to achieve yield.
AM Best assesses Eureka’s operating performance as adequate, as the company has been profitable through its technical capacities and supported by its investment income. Such results reflect the adjustment in underwriting and retention that took place after 2017. AM Best will remain vigilant of the company’s performance into a longer trend, as economic activity recovers in the region and its strategy continues to be implemented in 2021.
Negative rating actions could take place if volatility in Eureka’s operating performance affects the bottom-line results of the company, and ultimately, its risk-adjusted capitalization. Negative rating actions also could occur if the company’s risk appetite exceeds the capabilities of its capital, according to AM Best’s BCAR, mainly in underwriting or investing activities.
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