AM Best Affirms Credit Ratings of Austral Resseguradora S.A. and Austral Seguradora S.A.

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has a affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Ratings of “bbb+” of Austral Resseguradora S.A. (Austral Re) and Austral Seguradora S.A. (Austral Seg). The outlook of these Credit Ratings (ratings) is stable. Both companies are domiciled in Brazil, and are collectively referred to as Austral.

The ratings reflect Austral’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Austral Re is registered as a local reinsurer in Brazil, which positions the company for greater accessibility to business when compared with reinsurers licensed in the country as admitted or occasional. Austral Re’s operations focus on high growth areas, such as life, health, property, motor and surety risks, while Austral Seg mainly writes oil and gas, marine hull, surety and DPVAT risks. In addition, Austral has begun to implement a wide-ranging risk management program while maintaining a solid retrocessional strategy to safeguard capital and mitigate downside risk. The group continues to build out a business profile as an agile player able to provide a range of (re)insurance solutions.

Partially offsetting these positive rating factors is Brazil’s highly competitive (re)insurance market as home-grown and global (re)insurers continue to vie for market share. In addition to the highly competitive market conditions, Austral also must weather significant macroeconomic challenges in Brazil over the short and medium term. The group’s reinsurance program generally is placed with highly rated counterparties as it remains dependent on reinsurance to provide additional market capacity.

AM Best will continue to follow Austral’s operating performance, risk-adjusted capitalization and the execution of its business plan and risk management program. Factors that could lead to positive rating action include a sustained trend of very strong risk-adjusted capital, superior results when compared with its peer group over the medium term and strong brand recognition in Brazil and other markets where the companies operate. Factors that could lead to negative rating drivers include poor operating results when compared with its peers and large losses, significant deterioration of Brazil’s economy or a sovereign downgrade that could negatively impact the group, or a material decline in risk-adjusted capital.

This press release relates to Credit Ratings that have been published on AM 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 see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.