Ratings agency AM Best has placed under review with negative implications the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of IRB-Brasil Resseguros S.A. (IRB Brazil Re).
The decision comes after President José Carlos Cardoso and CFO Fernando Passos submitted their resignations to the Board on March 4, after confirming that Warren Buffett’s company had not taken a stake in IRB Brasil Re.
Adding additional uncertainty, IRB’s Board of Directors upheld the decision by its Statutory Board to initiate an investigation to identify the exact circumstances of the disclosure of information by IRB executives regarding its shareholder base.
AM Best is concerned about the effectiveness of IRB’s governance and believes the company will remain challenged while replacing two key executives.
A rating factor that could lead AM Best to remove the under review with negative implications status is the successful management transition while maintaining the company’s existing levels of risk-adjusted capitalization and operating performance as well as any potential impact on the company’s business profile.
A rating factor that could lead AM Best to remove the under review status and downgrade IRB’s ratings is a material deterioration of IRB’s risk-adjusted capitalization, operating performance, business profile, or enterprise risk management caused by any management change at the company.