French state-backed reinsurer Caisse Centrale de Reassurance (CCR) has opened the new year with a portfolio transfer from CCR to new reinsurance subsidiary CCR RE, a move expected to contribute a material amount of premium to CCR, says ratings agency A.M. Best.
A.M. Best said the highly strategic portfolio transfer will help to segregate CCR’s open-market reinsurance activities from its French state-backed reinsurance operations.
CCR Re will strengthen its parent company’s service offering and underwriting capabilities, in cases where the French state might want to add new risks to the state-guaranteed business.
In 2015 the subsidiary’s open-market segment made-up EUR 418.7 million of CCR’s EUR 1,287.2 million total gross written premium and A.M. Best forecasts continued reliable performance on a consolidated basis.
From January 2017 CCR Re will underwrite the group’s open market business covering life, non-life, and a number of specialty lines internationally.
The subsidiary will remain strongly integrated into CCR sharing group resources and leverage its parent company’s existing governance and risk management frameworks.
A.M. Best predicts CCR RE will generate high amounts of investment return driven profit – citing the underwriting losses produced by CCR’s open-market portfolio over the past four years.
The rating agency said; “CCR RE’s immediate focus will be on rationalising its underwriting portfolio and diversifying its natural catastrophe exposures,” but noted the subsidiary will have to navigate through challenging reinsurance market conditions to do so.
A.M. Best affirmed CCR Re’s rating is stable, quoting the long-established CCR brand and the subsidiary’s solid standalone risk-adjusted capitalisation and good business profile.