|Charlotte Vigier |
Senior Financial Analyst
+44 20 7397 0270
Jessica Botelho-Young, CA
+44 20 7397 0310
Associate Director, Public Relations
+1 908 882 2310
Senior Public Relations Specialist
+1 908 882 2318
FOR IMMEDIATE RELEASE
LONDON - JULY 05, 2023 12:29 PM (EDT)
AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Bosna Reosiguranje d.d. Sarajevo (Bosna Re) (Bosnia and Herzegovina [BH]). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Bosna Re’s balance sheet strength, which AM Best assesses 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 underpinned by its risk-adjusted capitalisation, which is expected to remain at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by good internal capital generation and a modest increase in underwriting risks. The company’s investment portfolio, which is concentrated in domestic assets, remains the greatest source of capital consumption in BCAR. This concentration exposes Bosna Re to the elevated levels of economic, political and financial system risks in BH. Offsetting rating factors also include Bosna Re’s relatively small capital base, which provides only a limited capital buffer in absolute terms to protect against adverse events, and its high dependence on retrocession. However, the elevated credit risk associated with this reinsurance dependence is partly mitigated by a very stable and well-rated retrocession panel.
Bosna Re has a track record of adequate operating performance, with profits stemming from both the underwriting and investment activities. Technical performance remained good in 2022, as evidenced by a combined ratio of 94.7%, marginally below the five-year (2018-2022) weighted average of 94.9%. AM Best expects prospective earnings to continue increasing modestly, as the company grows its top line whilst maintaining its cautious underwriting strategy, which focuses on careful risk selection and a comprehensive use of retrocession protection.
With high barriers to entry in BH, Bosna Re benefits from a dominant market position as the only domestic reinsurer licensed to write life and non-life insurance. The company remains the leading domestic reinsurer with a market share in excess of 75%, based on 2022 gross written premiums (GWP). Offsetting factors in the business profile assessment include Bosna Re’s highly concentrated underwriting portfolio, with half of GWP derived from its top three cedants and its limited geographic diversification (with only 6% of business emanating from abroad in 2022).
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.