AM Best Affirms Credit Ratings of Bosna Reosiguranje d.d. Sarajevo
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), albeit with a relatively small buffer. Investment risk remains a key driver of capital consumption in BCAR, reflective of Bosna Re’s concentration in domestic assets, which exposes the company to elevated levels of economic, political and financial system risks associated with BH. The ratings also consider Bosna Re’s relatively small capital base, as compared to larger international reinsurers, which exposes the company’s risk-adjusted capitalisation to potential volatility. Dependence on retrocession remains high; however, the associated credit risk is mitigated partly by a stable retrocession panel of excellent credit quality.
