AM Best downgrades Bermuda-based Berking Re credit ratings

AM Best has downgraded the credit ratings of Berking Re Limited, a Bermuda-based reinsurance company, citing concerns over the weakened credit fundamentals and the heightened contagion risk from its parent company, PFY Cayman.

Berking Re’s Financial Strength Rating was lowered to C+ (Marginal) from B- (Fair) and the Long-Term Issuer Credit Rating to “b-” (Marginal) from “bb-” (Fair).

The rating agency has also maintained its under review with negative implications status for these ratings.

AM Best’s assessment of Berking Re’s balance sheet strength remains adequate, but its operating performance has been revised to marginal from adequate due to delays in business reporting and a lack of clear visibility into the company’s latest financial performance.

It is anticipated that it will take Berking Re a longer period to achieve break-even results as it strives to build economies of scale and improve cost efficiency.

According to the announcement, the downgrades primarily reflect AM Best’s view that Berking Re is exposed to increased negative contagion risk from PFY Cayman.

The parent group is experiencing adverse financial and business developments, coupled with weakened financial flexibility in its capital structure. PFY Cayman has a short operational history, and its capital position is limited and deteriorating due to sustained operating losses, the agency noted.

Insurance regulatory oversight is expected to partially mitigate potential undue influence from the parent company of Berking Re’s capital and assets.

However, AM Best warned, the under review with negative implications status highlights the uncertainty surrounding the company’s capital position, as audited financial statements for 2024 and recent 2025 financial performance are not yet available.

Berking Re has disclosed that PFY Cayman is currently in the process of raising funds. In the event that PFY Cayman fails to execute its capital plan successfully, without alternative contingent capital support or revision of business plans.

AM Best also expects a deteriorating trend on Berking Re’s risk-adjusted capitalisation to exhibit, which could further create negative pressure on its current balance sheet strength assessment.

The ratings will remain under review with negative implications pending more visibility into Berking Re’s up-to-date financial information, as well as the execution of PFY Cayman’s capital plans in the near future.

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