AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Eureka-Re.
AM Best suggests the outlook revisions to positive reflect its expectation that the overall balance sheet strength of Eureka will continue to benefit from improved underwriting and investment risk selection, as well as positive bottom-line results.
The rating agency assesses Eureka’s balance sheet strength at the very strong level, as the availability and quality of the firm’s capital is well-positioned against its risk profile, which has become more diverse with positive impacts through the years.
AM Best writes, “Eureka is subject to catastrophe-related losses, and as a result, has adjusted its retentions according to its experience, with a high-quality panel of reinsurers.
“Investments are set to match insurance obligations, with a proprietary portfolio aimed to achieve yield and develop business opportunities.
“AM Best will continue to monitor those investments and their impact on the risk-adjusted capitalization of the company.”
AM Best assesses Eureka’s operating performance as adequate, as the company sustained profitable performance in 2022 through its technical capacities, supported by its investment income.
According to the rating agency, these results indicate Eureka’s continuous adjustments in underwriting and retentions that adapt to the evolving business landscape.
Eureka was established in 2009 in Barbados, and is a Latin American regional reinsurer. It underwrites mostly lower layers of facultative programs, originated through managing general agents.
“While most of premium taken by the company is sourced from Latin America, the company has diversified internationally, underwriting almost half of its business outside the region,” explains AM Best.
The rating agency continues, “Eureka’s business profile is assessed as neutral, recognizing the company’s evolving geographical diversification and its capacity to take risks; AM Best will continue to monitor the company’ performance in newer territories and assumed risks.”
AM Best states that positive rating actions could take place in the medium term if balance sheet strength continues to benefit from greater diversification in risks undertaken by Eureka.
Meanwhile, negative rating actions could occur if the equity-focused investment strategy pressures risk-adjusted capitalization of the company to levels not supportive of the current ratings, and/or if volatility in Eureka’s operating performance affects the bottom-line results of the company, and ultimately, its risk-adjusted capitalization.
