MEXICO CITY--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” (Good) to Worldwide Reinsurance Limited (Worldwide Re) (Trinidad and Tobago). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Worldwide Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management (ERM).
Worldwide Re launched operations in 2013 to provide reinsurance capacity for property, marine and liability and is diversified geographically throughout the Caribbean, Central and South America, Asia Pacific and Europe. Worldwide Re operates through a network of brokers and intermediaries.
Worldwide Re’s strong balance sheet strength is underpinned by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), sustained good underwriting quality and profitability, solid capital management and geographically diversified premiums. Conversely, the absence on non-proportional coverage in its reinsurance program, leaves the company´s retention exposed to large deviations in claims that could pressure its risk-based capital metrics.
The company´s capital base has grown consistently over time through reinvestment of earnings, reflecting a compound annual growth rate of 3%, mainly driven by sound underwriting practices. In AM Best´s view, Worldwide Re´s strong balance sheet strength could be protracted from the absence of further improvements to its retro structure in order to withstand severe catastrophic events.
In 2022, Wordwide Re’s operating performance was characterized by a combined ratio of 90% and a 4.7% return on equity, enabled by well-contained claims and operating expenses, as well as a release of excess reserves. AM Best expects acquisition expenses to stabilize as the company continues to expand in different geographies. Financial income continues to support Worldwide Re´s results; however, the company is not dependent on this revenue to achieve positive bottom-line results. Worldwide Re constantly reviews its underwriting guidelines to improve the performance of business segments that are deviating from targets.
Even though the operating performance of the reinsurer has been adequate through its business cycle, AM Best considers that the company’s ERM framework must develop further in terms of risk management tools and also visualizes room for strengthening its corporate governance structure, in order to safeguard its sound operating performance and risk-based capital position.
Positive rating actions could occur if Worldwide Re is able to further improve its ERM profile while maintaining its current level of risk-adjusted capitalization and adequate underwriting results. Negative rating actions could occur if the company´s operating performance deteriorates to a level no longer supportive of the ratings.
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