Press Release - JULY 22, 2011

A.M. Best Affirms Ratings of Bosna Reosiguranje d.d. Sarajevo


CONTACTS:
 
Ghislain Le Cam
Financial Analyst
+(44) 20 7397 0268
ghislain.lecam@ambest.com

Carlos Wong-Fupuy
Senior Director
+(44) 20 7397 0287
carlos.wong-fupuy@ambest.com

Carole Lovell
Public Relations Associate
+(1) (908) 439-2200, ext. 5445
carole.lovell@ambest.com

Jim Peavy
Assistant Vice President, Public Relations
(+(1) 908) 439-2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

LONDON - JULY 22, 2011
A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of B+ (Good) and issuer credit rating of "bbb-" of Bosna Reosiguranje d.d. Sarajevo (Bosna Re) (Bosnia and Herzegovina). The outlook for both ratings remains stable.

The ratings of Bosna Re reflect its good risk-adjusted capitalisation, stable underwriting performance and dominant domestic business position.

A.M. Best believes that Bosna Re's risk-adjusted capitalisation remains supportive of the current ratings, whilst the company's capital level is well protected by a comprehensive retrocession programme placed with securely rated companies.

Bosna Re's technical performance slightly improved in 2010 and translated into a technical profit of BAM 1.0 million; the company's combined ratio deceased to 94.6% (97.4% in 2009) due to a decline in expense ratio to 26.5% (30.3% in 2009), mainly driven by a reduction of taxes in the management expenses. Going forward, A.M. Best expects Bosna Re's underwriting performance to remain at a similar profitable level, with a combined ratio in the range of 95%.

A.M. Best believes that Bosna Re's overall performance will continue to be positive (BAM 2.7 million in 2010), and is likely to be mainly derived from the firm's investment income. Bosna Re has a strong position in the domestic market mainly stemming from its solid links with its local cedants, most of which also are shareholders of the company, and from weak local competition, which translated into a healthy premium of BAM 51.3 million in 2010, mainly from Bosnia and Herzegovina. A.M. Best expects Bosna Re to experience a moderate growth of around 2%–3% in its business written in the next two years.

The company's insurance portfolio mix is relatively limited, and mostly dominated by two main traditional lines of business—motor and property (accounting for respectively, 46% and 31% of 2010 net written premiums). A.M. Best does not anticipate any substantial changes to the company's portfolio composition in the next two years.

The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilised include: "Risk Management and the Rating Process for Insurance Companies" and "Understanding BCAR for Property/Casualty Insurers". Methodologies can be found at www.ambest.com/ratings/methodology.

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.

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

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AMB# Company Name
088596 Bosna Reosiguranje d.d.