AM Best Upgrades Credit Ratings of East Caribbean Reinsurance Company Limited
AM Best has upgraded the Financial Strength Rating to B++ (Good) from B+ (Good) and the Long-Term Issuer Credit Rating to “bbb” (Good) from “bbb-” (Good) of East Caribbean Reinsurance Company Limited (ECRC) (Anguilla). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
The ratings reflect ECRC’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The rating upgrades reflect continued improvement in ECRC’s balance sheet strength metrics. The company level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is assessed as strongest. While absolute capital and surplus remains modest, ECRC’s BCAR scores have measured consistently at the strongest level for the past several years, showing the relative strength of its balance sheet given its lower levels of premium retention. ECRC has grown capital and surplus annually through favorable net earnings, despite occasional dividend payments to its parent entity, TDC Group Limited (TDC Group). Furthermore, the company’s balance sheet strength assessment is supported further by strong liquidity measures and a conservative asset portfolio, which is primarily composed of cash and short-term investments. However, ECRC has a high dependence on reinsurance, but it is mitigated by the use of a high-quality panel of reinsurers with cash calls built into its reinsurance program.
