LONDON--(BUSINESS WIRE)--AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Dunav-Re a.d.o. (Dunav-Re) (Serbia).
The ratings reflect Dunav-Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The revision of the outlooks to positive from stable primarily reflects Dunav-Re’s record of robust operating performance and the expectation for this to continue.
AM Best expects Dunav-Re to report good underwriting profitability in the short to medium term, in line with its recent experience. The company’s international business has grown rapidly, and although it is performing well, its performance is marginally lower than the business sourced domestically. Dunav-Re’s results remain susceptible to potential volatility due to the company’s exposure to catastrophe events.
Dunav-Re’s risk-adjusted capitalisation remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by capital contributions from its ultimate parent, Dunav osiguranje a.d.o. (Dunav Insurance). AM Best expects future business growth to be supported by internal capital generation and financial support from the company’s parent. Dunav-Re is somewhat dependent on retrocession to manage domestically sourced business; however, the credit risk associated with this is mitigated partially by the excellent credit quality of the company’s retrocession panel. Offsetting factors in the balance sheet strength assessment include the company’s high exposure to Serbia’s financial system and its small capital base.
Dunav-Re is a multiline reinsurer operating from within Serbia. It has a dominant position in its local market, where it generates the majority of its business, with Dunav Insurance being its largest cedant. The company is active outside of its domestic market, where it wrote approximately two-thirds of its net written premiums in 2021.
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