AM Best upgrades Dunav-Re’s ratings, reflecting strong financial performance

AM Best, the credit rating agency, has upgraded the ratings for Serbian reinsurance company Dunav-Re a.d.o, raising its Financial Strength Rating from B+ (Good) to B++ (Good) and its Long-Term Issuer Credit Rating from “bbb-” (Good) to “bbb” (Good), with the outlook adjusted from positive to stable.

These upgraded ratings are driven by Dunav-Re’s balance sheet, which AM Best classifies as strong, coupled with the company’s consistent operational success, focused business strategy, and effective enterprise risk management.

The ratings take into account the neutral effect of the company’s ownership by Dunav osiguranje a.d.o. (Dunav Insurance).

The decision to upgrade reflects Dunav-Re’s strong financial performance over recent years, demonstrated by an average return-on-equity ratio of 18.8% from 2019 to 2023.

Regardless of the rapid international business expansion, Dunav-Re has consistently achieved positive underwriting results, with a five-year average combined ratio of 84.0%. Continued solid performance is anticipated, supported by careful underwriting practices and positive investment returns.

Dunav-Re’s risk-adjusted capitalisation continues to be rated at the highest level based on Best’s Capital Adequacy Ratio. AM Best anticipates that the company’s internal capital generation will adequately sustain its future growth.

Although Dunav-Re relies on retrocession to manage its domestically sourced business, the associated credit risk is mitigated by the excellent credit quality of its retrocession partners.

However, the balance sheet strength is constrained by the company’s significant exposure to Serbia’s financial system and a capital base that, despite its growth, remains modest compared to global standards.

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