A.M. Best has assigned a financial strength rating of “B+ (Good)”, and a long-term issuer credit rating of “bbb-“ to Barbados reinsurer Energy Risk Indemnity Reinsurance (ERI Re).
ERI Re is a Barbados-based start-up reinsurer, originally established in 2013 as a segregated cell company (SCC) focused in energy risks.
Between 2013 and 2015, ERI Re conducted business as an SCC, however, in 2016 management changed its license to a qualify as an insurance company to diversify its book of business and to underwrite a broader range of risks in the Latin American property and casualty market.
The ratings of ERI Re reflect its strong capital base for the purpose of developing a diversified property and casualty book of business throughout Latin America.
According to A.M. Best, the business plan of the company is “well structured”, but is dependent on reinsurance, a key factor considering the expositions the company wants to take geographically in Latin America.
The ratings agency explained that the property and casualty lines it is targeting, such as bonds, property, oil and mining, require strong reinsurance protection.
ERI Re is currently structuring its reinsurance programme and will remain a key factor for future rating assessments.
A.M. Best said: “While the company is targeting reasonable premium volumes, due to the start-up nature of the company, execution risk limits the ratings; nevertheless, the company has a strong management and underwriting team to execute its business plan and to develop the company’s risk capabilities as its business grows.”
It added: “Positive rating actions could take place if the company is able to achieve its goals in terms of premium volume and profitability while maintaining a strong risk-adjusted capitalisation. Negative rating actions could take place if the company fails to meet its financial performance to a level that impacts its capital and therefore its risk-adjusted capitalisation.”
