AM Best Assigns Credit Ratings to Ikano Re AG

Business Wire

LONDON--(BUSINESS WIRE)-- AM Best has assigned a Financial Strength Rating of A (Excellent) and a Long-Term Issuer Credit Rating of “a” (Excellent) to Ikano Re AG (Ikano Re) (Switzerland). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Ikano Re’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

Ikano Re is ultimately majority-owned by the founding family of the global retail store brand, IKEA. The company benefits from its niche position as provider of reinsurance coverage for risks linked to the global IKEA franchise system, with the majority of the business concentrated in property damage and business interruption coverage of the IKEA stores. Further, the company provides additional reinsurance capacity for global natural catastrophe risks led by reputed reinsurers. This business is expected to account for a third of Ikano Re’s premiums over the medium term.

Ikano Re’s very strong balance sheet assessment is underpinned by its risk-adjusted capitalisation, which is expected to remain comfortably in excess of the minimum required for the strongest assessment level, as measured by Best’s Capital Adequacy Ratio (BCAR). While the company’s business is expected to remain dependent on retrocession for the capacity that it offers, its retrocession partners are generally of excellent credit quality. The assessment also considers Ikano Re’s conservative investment strategy and prudent reserving practices.

Ikano Re has a track record of strong operating performance, generating a five-year (2021-2025) weighted average return-on-equity ratio of 17.8%. Results have been underpinned by good underwriting performance, as demonstrated by a five-year (2021-2025) weighted average combined ratio of 46.4%, which reflects very low levels of expenses and modest average claims experience. AM Best considers Ikano Re’s risk management capabilities to be commensurate with its risk profile.

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 Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.