A.M. Best Affirms Ratings of Nacional de Reaseguros, S.A.

LONDON--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Nacional de Reaseguros, S.A. (Nacional) (Spain). The outlook for both ratings remains positive.

The ratings reflect Nacional’s excellent risk-adjusted capitalisation, strong operating performance and well-established business profile as a leading reinsurer in Spain. The ratings also factor in the company’s decreasing concentration in the domestic market and reduced exposure to sovereign debt.

Nacional’s risk-adjusted capitalisation remains excellent, supported by retained earnings, reserve redundancies and a comprehensive retrocession programme. Future capital levels are likely to continue to benefit from high earnings retention, as paid dividends are typically 20% to 30% of profit after tax. The reinsurer has been de-risking its investment portfolio over the past few years, and exposure to Spanish sovereign and corporate debt was down to 11% of total investments at year-end 2014 (from 27% in 2011).

Nacional’s disciplined underwriting approach and limited exposure to natural catastrophes have contributed to stable technical results over the past five years, with a weighted average combined ratio just below 95%. While the development of the international portfolio might lead to slightly higher volatility in the next couple of years, A.M. Best expects Nacional’s operating performance to remain strong, with a profit before tax in the range of EUR 43 million to EUR 48 million. The recent changes in the investment portfolio structure have resulted in a moderate decrease in yields, however, investment income is forecast to remain at a good level.

Nacional maintains a strong competitive position as the leading independent reinsurer in Spain. Gross written premium increased by approximately 12% to EUR 483 million during 2014, driven by the recent recovery in the Spanish economy and ongoing growth abroad. To reduce its dependence on domestic demand, Nacional has successfully expanded its international activities in recent years, by targeting small to medium-sized insurers and mutual societies in Portugal, Italy, France and other European countries. Foreign business is expected to account for one-third of total premium by 2016.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

Charlotte Vigier, +(44) 20-7397-0270

Senior Financial Analyst

charlotte.vigier@ambest.com

or

Carlos Wong Fupuy, +(44) 20-7397-0278

Senior Director, Analytics

carlos.wong-fupuy@ambest.com

or

Christopher Sharkey, +(1) 908-439-2200, ext. 5159

Manager, Public Relations

christopher.sharkey@ambest.com

or

Jim Peavy, +(1) 908-439-2200, ext. 5644

Assistant Vice President, Public Relations

james.peavy@ambest.com

Source: A.M. Best Company, Inc.