AM Best

AM Best Affirms Credit Ratings of Bosna Reosiguranje d.d. Sarajevo

 Emily Thompson
Financial Analyst
+44 20 7397 0291

Salman Siddiqui, ACA
Director, Analytics
+44 20 7397 0331

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


LONDON - JUNE 17, 2020 11:00 AM (EDT)
AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Bosna Reosiguranje d.d. Sarajevo (Bosna Re) (Bosnia and Herzegovina [BH]). The outlook of these Credit Ratings (ratings) remains stable.

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

Bosna Re’s balance sheet strength is supported by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s balance sheet strength benefits from a well-rated retrocession panel and prudent reserves. The relatively small capital base remains an offsetting factor to the balance sheet strength assessment, with little capital buffer to protect against adverse events in absolute terms. Furthermore, the company’s investment portfolio remains a source for potential earnings and capital volatility. The company has paid extraordinary dividends over the last three years, returning proceeds from a large asset sale, which has limited capital growth. With no more extraordinary dividends forecast going forward, AM Best expects prospective risk-adjusted capitalisation to benefit from internal capital generation and remain at the strongest level.

Bosna Re maintained its market-leading position in BH in 2019, commanding a market share of approximately 73%, based on gross written premiums (GWP); the company remains the only domestic reinsurer licenced to write life and non-life insurance. AM Best considers the company’s competitive position defensible over the medium term, owing to the high barriers to entry in BH, which include regulatory constraints and the burdensome costs of operating in a small market. Bosna Re’s underwriting portfolio remains concentrated, with approximately 45% of its GWP derived from its top three cedants (some of which include shareholders). Additionally, the company’s geographic diversification remains limited, with only 8% of GWP emanating from outside of BH. AM Best believes that the company’s dominant domestic market profile provides some protection against the potential impact from the challenging economic and political conditions in BH.

Bosna Re has a track record of stable operating performance, generating pre-tax profits of BAM 3.1 million (USD 1.8 million) in 2019. Stable underwriting performance underpins the company’s results, with a five-year average combined ratio of 95.1% (2015-2019), further supplemented by investment earnings. AM Best expects Bosna Re’s earnings to remain stable, as the company maintains a cautious underwriting strategy.

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 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 credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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AMB# Company Name
088596 Bosna Reosiguranje d.d.