AM Best Places Credit Ratings of Austral Resseguradora S.A. and Austral Seguradora S.A. Under Review With Developing Implications

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has placed under review with developing implications 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). Both companies are domiciled in Brazil, and collectively are referred to as Austral.

The rating actions follow the recent announcement that Austral Re and Terra Brasis Resseguros have entered into a definitive agreement to merge their reinsurance operations. The combined entity will be the fifth-largest reinsurer based on estimated surplus (BRL 377 million, or USD 97 million), and the third-largest reinsurer based on estimated premiums (BRL 766 million, or USD 197 million annualized) in Brazil’s reinsurance market, as of March 2019. The two companies have been in discussion for a few months, likely in an attempt to create a stronger reinsurance player in Brazil. The deal is expected to close within six months, after regulatory (SUSEP) and anti-trust (CADE) approvals.

The shareholders of the proposed combined entity will be Vinci Partners, Brasil Plural and the International Finance Corporation (IFC), the financial arm of the World Bank. Bruno Freire, currently Austral Re’s CEO, will be the CEO of the combined entity. Rodrigo Botti, which is currently Terra Brasis’ CEO, will be the chief financial officer of the combined entity.

The ratings will remain under review pending the completion of the transaction. AM Best will continue to hold discussions with the companies and monitor their risk-adjusted capitalization, operating performance, business profile and enterprise risk management.

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.