AM Best affirms IRB (Re)’s credit ratings with stable outlook

AM Best has affirmed Brazilian reinsurer IRB (Re)’s Financial Strength Rating of A- and its Long-Term Issuer Credit Rating of “a-”, while revising the outlooks from negative to stable.

The ratings reflect IRB (Re)’s balance sheet strength, assessed at the strongest level by AM Best, its adequate operating performance, neutral business profile, and appropriate enterprise risk management (ERM).

Concerns about the company’s capital adequacy have been eased somewhat following the completion of its capitalisation offer and improved risk-adjusted capital levels.

The stable outlooks are based on AM Best’s expectation that the company’s balance sheet strength will remain at the strongest level, supported by a sustained improvement in operating performance and the benefits from management initiatives.

Over the past five to six years, IRB (Re)’s surplus has grown, and its BCAR scores are among the highest for its rating level. The company’s balance sheet is further protected by a retrocession program with highly rated reinsurers, which helps keep its net exposures manageable.

AM Best considers IRB (Re)’s operating performance as adequate, noting improvements throughout 2024 due to portfolio refinements and changes in the company’s culture.

The rating agency recognises IRB (Re)’s efforts to reinforce its ERM and governance structure, which have helped stabilise its operations and improve underwriting performance.

“A factor that could lead to negative rating action are Brazil’s macroeconomic conditions, which could contribute further to a deterioration of IRB’s operating performance and become an obstacle to its ability to raise capital if needed. While no positive rating actions are foreseen in the short term, a positive impact could take place if the company continues to show improvements in its operating performance by implementing its transformation strategy,” said AM Best.

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