Global credit ratings agency 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 Worldwide Reinsurance Limited (Worldwide Re) (Trinidad and Tobago).
From what we understand, the ratings reflect Worldwide Re’s balance sheet strength, which the agency assesses as strong.
Best also cited the firm’s adequate operating performance, neutral business profile and marginal enterprise risk management (ERM) too.
For those who are not aware, Worldwide Re launched operations in 2013 to provide reinsurance capacity for property, marine and liability lines of business. The company operates through a network of brokers and intermediaries.
Moreover, Best noted that the positive outlooks also reflect Worldwide Re’s reinforcement to its balance sheet strength through enhancements to its non-proportional retrocession structure and decreased exposure to catastrophe-prone zones.
As well as this, the ratings also reflect the firm’s good and sustained underwriting quality and profitability, solid capital management and geographically diversified premiums.
However, a couple of areas that are partially offsetting these positive rating factors are Worldwide Re’s marginal ERM profile, which Best noted has shown signs of improvement, as well as the highly competitive landscape within the firm’s target geographic markets amid a challenging economic environment.
Looking back at 2023, Worldwide Re recorded a combined ratio of 82.6% and a return on equity of 11.4%, which was heavily enabled by well-contained claims and operating expenses, as well as a release of excess reserves.
However, Best notes that while the operating performance of the organisation has been adequate through its business cycle, the agency is of the view that Worldwide Re must continue to develop its ERM framework further in terms of risk management tools and corporate governance structure in order to safeguard its sound operating performance and risk-based capital position.
The agency explained that positive rating actions could occur if Worldwide Re is able to sustain improvements within its balance sheet assessment, while maintaining its current level of risk-adjusted capitalization, or further develop its ERM profile.
But, the agency warned that negative rating actions could occur if the company´s operating performance deteriorates to a level no longer supportive of the ratings.
