AM Best


JULY 15, 2022 02:29 PM (EDT)

AM Best Affirms Credit Ratings of Active Capital Reinsurance, Ltd.


CONTACTS:
 Ricardo Rodríguez
Financial Analyst
+52 55 1102 2720, ext. 139
ricardo.rodriguez@ambest.com

Eli Sanchez
Associate Director, Analytics
+52 55 1102 2720, ext. 108 eli.sanchez@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jeff Mango
Managing Director, Strategy & Communications
+1 908 439 2200, ext. 5204
jeffrey.mango@ambest.com

FOR IMMEDIATE RELEASE

MEXICO CITY - JULY 15, 2022 02:29 PM (EDT)
AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Active Capital Reinsurance, Ltd. (Active Re) (Barbados). The outlook of these Credit Ratings (ratings) is positive.

The ratings reflect Active Re’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The positive outlooks are maintained based on sound operating performance driven by consistent underwriting practices that have maintained profitable results. AM Best has a favorable view of Active Re’s steady improvement of its operating performance amid its continuous global expansion, supported by consistent sound underwriting practices comparing strongly with competitors despite a challenging operating environment driven by the COVID-19 pandemic.

Active Re’s balance sheet strength is underpinned by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The ratings also reflect Active Re’s adequate reinsurance program and a supporting risk management framework for its risk profile. An offsetting rating factor is the strong competitive environment in its target geographic markets, which the company faces through its global expansion.

Active Re is a Barbados-based reinsurer established in 2007. The company operates with net premiums written (NPW) composed of property/casualty (49%), surety (26%) and affinity (25%), as of 2021. The company has a diversified geographic footprint in Latin America, the Middle East, Europe and Asia Pacific, and focuses its underwriting efforts on short-term non-catastrophe risks.

The company’s capital base, consistently grown through reinvestment of earnings and capital contributions, has helped maintain Active Re’s risk-adjusted capitalization at the strongest level. The company’s expansion strategy continues to be reinforced adequately through consistent improvements to its reinsurance program, placed among a diversified group of reinsurers with good security levels, consequently minimizing counterparty credit risk exposures. Moreover, the company is characterized by a conservative underwriting leverage as reflected by an NPW to surplus ratio of 0.99x. Nevertheless, Active Re’s ratings could be susceptible to uncertainty over future underwriting performance, as the company expands its business into new geographic markets, automatic contracts and managing general agents.

In 2021, while orderly expanding its book of business, Active Re maintained its bottom-line results through contained acquisition expenses derived from its affinity line of business and continued operating efficiencies, enabled for the most part by managing general agents. Despite increased claims expenses mainly triggered by the impact of the COVID-19 pandemic for the first quarter, Active Re has continued to maintain profitability as reflected by a return on earned premium and return on equity of 25% and 29%, respectively.

The continuous improvement in Active Re’s ERM framework has allowed the company to better identify and manage its risks. As a result, related party transactions continue to be reduced significantly, improving its financial flexibility.

Positive rating actions could occur if the company continues to enhance its operating performance with metrics that are consistent with the strong assessment, according to AM Best. Negative rating actions could result from deterioration in risk-adjusted capital due to major capital outflows.

The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Nov. 13, 2020), which provides a comprehensive explanation of AM Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:


  • Available Capital & Holding Company Analysis (Version Oct. 13, 2017)

  • Catastrophe Analysis in A.M. Best Ratings (Version Oct. 13, 2017)

  • Evaluating Country Risk (Version Oct. 13, 2017)

  • Scoring and Assessing Innovation (Version March 5, 2020)

  • Understanding Universal BCAR (Version June 30, 2022)

View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to Guide to Best’s Credit Ratings.


  • Previous Rating Date: July 8, 2021

  • Date Range of Financial Data Used: Dec 31, 2017-Dec. 31, 2021

This press release relates to rating(s) that have been published on AM Best’s website. For additional 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.

AM Best does not validate or certify the information provided by the client in order to issue a credit rating.

While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. AM Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.

AM Best’s credit ratings are independent and objective opinions, not statements of fact. AM Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. AM Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. For more information regarding AM Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. 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 specializing 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.


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AMB# Company Name
093065 Active Capital Reinsurance, Ltd.