AM Best has affirmed the Financial Strength Rating of A– (Excellent) and the Long-Term Issuer Credit Rating of a– (Excellent) of Hong Kong-based reinsurer Peak Re and its subsidiary in Switzerland, while also maintaining a negative outlook, reflecting the rating agency’s concern over potential contagion risk in case of an adverse credit event at the Peak Re’s majority shareholder, Fosun International Limited.
AM Best said that over the short to intermediate term, if a potential adverse credit event were to occur at Fosun, it anticipates that Peak Re may still be subject to contagion risk to a certain extent. Notwithstanding, the rating agency noted that Peak Re has demonstrated a “track record of effective mitigation of potential contagion risk” stemming from Fosun’s weaker credit fundamentals and can maintain its financial strength.
According to AM Best, Peak Re’s business fundamentals remain stable, with a very strong balance sheet strength, adequate operating performance, neutral business profile, and appropriate enterprise risk management.
“Other factors supporting Peak Re’s balance sheet strength include good financial flexibility to access traditional and alternative capital markets, an overall prudent investment risk profile, a comprehensive retrocession program, and strong liquidity,” the rating agency explained.
Peak Re recorded solid H1 business results, reporting a record net profit after tax of $160 million alongside a P&C combined ratio of 82.2%.
Franz-Josef Hahn, CEO of Peak Re, commented, “We have built a resilient and high-quality P&C portfolio, carefully diversified across lines and geographies, and our life and health (“L&H”) business continues to be a reliable contributor to our reinsurance success and a further element of diversification.
“With the prevailing tailwinds of robust reinsurance demand and strengthening of P&C pricing, I am confident of Peak Re’s success in the upcoming 2024 P&C business renewals and beyond.
“AM Best’s reaffirmation of our A- rating is a strong endorsement of the accomplishments of Peak Re over the past 12 months. Most importantly, it reassures our business partners of Peak Re’s very strong capital and liquidity positions, which are core elements of our value proposition.”
