AM Best upgrades Eureka-Re’s ratings

AM Best, the global credit rating agency, has upgraded the ratings of reinsurer Eureka-Re SCC (Eureka) (Barbados).

The Financial Strength Rating has been upgraded to A- (Excellent) from B++ (Good) along with the Long-Term Issuer Credit Rating changed to “a-” (Excellent) from “bbb+” (Good).

AM Best stated that the ratings reflect Eurekas’s balance sheet strength assessed as very strong, adequate operating performance, neutral business profile, and appropriate enterprise risk management (ERM).

The balance sheet reflects the availability and quality of the firm’s capital, as it has strengthened through positive bottom-line results, limited risk takings and a policy of reinvesting earnings.

However, Eureka is subject to catastrophe-related losses; therefore, it has implemented a stringent risk modelling procedure and adjusted its retentions according to its experience, further enhancing its reinsurance programme with a high-quality panel of reinsurers.

The reinsurer’s investments are set to match insurance obligations, with a proprietary portfolio aimed at achieving yield and developing business opportunities. AM Best will monitor these investments and their impact on the company’s risk-adjusted capitalisation.

The rating upgrades reflect the company’s growing capital base, highlighted by well-established and functioning ERM practices that have safeguarded its capital base while stabilising results.

Established in 2009, Eureka is a Barbados-domiciled regional reinsurer in Latin America, underwriting mostly lower layers of facultative programmes. Most of its premium is sourced from Latin America; however, the firm has diversified internationally, investing in seasoned personnel and systems.

Eureka’s business profile is assessed as neutral, recognising the company’s evolving geographic diversification and its capacity to assume risks, explained AM Best.

Eureka’s operating performance is assessed as adequate, as it has sustained profitable performance in 2023 through its technical capacities.

The firm sustained Hurricane Otis without any major impact on its results or balance sheet, reflecting the continuous strengthening of its ERM practices and adjustments in underwriting and retentions that have successfully adapted to the evolving business landscape.

AM Best will continue monitoring the company’s risk-adjusted capitalisation, risk appetite, and operating performance.

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