AM Best Upgrades Credit Ratings of Eureka-Re SCC

AUGUST 01, 2024 12:17 PM (EDT)

AM Best Upgrades Credit Ratings of Eureka-Re SCC

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FOR IMMEDIATE RELEASE

MEXICO CITY - AUGUST 01, 2024 12:17 PM (EDT)
AM Best has upgraded the Financial Strength Rating to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating to "a-" (Excellent) from "bbb+" (Good) of Eureka-Re SCC (Eureka) (Barbados). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.

The ratings reflect Eurekas's balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The rating upgrades reflect the company's growing capital base, highlighted by well-established and functioning ERM practices that have safeguarded its capital base while stabilizing results.

Eureka, established in Barbados in 2009, is a regional reinsurer in Latin America. The company underwrites mostly lower layers of facultative programs, originated through managing general agents. While most of the premium taken by the company is sourced from Latin America, it has diversified internationally, investing in seasoned personnel and systems. Eureka's business profile is assessed as neutral, recognizing the company's evolving geographic diversification and its capacity to assume risks; AM Best will continue to monitor these assumed risk and company' performance in newer territories.

AM Best assesses Eureka's balance sheet strength at the very strong level, as the availability and quality of its capital have strengthened through positive bottom line results, limited risk takings and a policy to reinvest earnings. The company is subject to catastrophe-related losses, and as a result, has implemented a stringent risk modeling procedure and adjusted its retentions according to its experience, further enhancing its reinsurance program with a high-quality panel of reinsurers. Investments are set to match insurance obligations, with a proprietary portfolio aimed at achieving yield and developing business opportunities. AM Best will continue to monitor those investments and the impact on the company's risk-adjusted capitalization.

AM Best assesses Eureka's operating performance as adequate, as it has sustained profitable performance in 2023 through its technical capacities. This was evident from Hurricane Otis, which occurred without any major impact to company results or its balance sheet. These results reflect Eureka's continuous strengthening of its ERM practices and adjustments in underwriting and retentions that have successfully adapted to the evolving business landscape.

Negative rating actions could take place if risk-adjusted capitalization diminishes due to undertaking higher risks mainly in underwriting or investing. Positive rating actions could take place in the medium term if there is a positive trend in the operating performance backed by stability in net results and quality of underwriting.

The methodology used in determining these ratings is Best's Credit Rating Methodology (Version Jan. 18, 2024), which provides a comprehensive explanation of AM Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology .

Key insurance criteria reports utilized:

· Evaluating Country Risk (Version June 6, 2024)

· Understanding Global BCAR (Version March 7, 2024)

· Catastrophe Analysis in AM Best Ratings (Feb. 8, 2024)

· Available Capital and Insurance Holding Company Analysis (Version Jan. 18, 2024)

· Scoring and Assessing Innovation (Version Feb. 27, 2023)

View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, relevant sources of information and the frequency for updating ratings, please refer to Guide to Best's Credit Ratings.

· Previous Rating Date: May 19, 2023

· Initial Rating Date: Feb. 24, 2021

· Date Range of Financial Data Used: Dec. 31, 2019-Mar. 31, 2024

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