AM Best Affirms Credit Ratings of East Caribbean Reinsurance Company Limited

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of East Caribbean Reinsurance Company Limited (ECRC) (Anguilla). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect ECRC’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.

Balance sheet strength is supported by its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which is assessed as strongest. The absence of catastrophic events has allowed the level of absolute surplus to be strengthened over the past four years. Furthermore, balance sheet strength is supported by a very conservative investment portfolio that is concentrated in cash and short duration investments, providing additional liquidity. However, the small absolute size of surplus subjects the balance sheet to greater volatility under any adverse developments. In addition, the company relies heavily on retrocession to manage catastrophe exposure, minimize earnings volatility and protect surplus. Potential exposure is reduced through a conservative reinsurance program placed predominantly with a high quality panel of reinsurers. ECRC’s main customer is St Kitts-Nevis-Anguilla Trading and Development Company Limited, the majority owner; however, ECRC is expanding and provides reinsurance solution to several insurance companies operating in the Organization of Eastern Caribbean States. Overall earnings have fluctuated over the past five years but have remained favorable, which the company has achieved by continuing business with existing treaties without increasing its net retained risk. While ECRC has established relationships with key participants in its target markets, it continues to operate in a very competitive environment. Furthermore, domestic and regional markets face continuing uncertainties and weakened economic conditions as a result of a decrease in tourism and struggling commodity markets.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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