A.M. Best has affirmed the financial strength rating of B+ (Good) and the long-term issuer credit rating of “bbb-” of East Caribbean Reinsurance Company Limited (ECRC), based in Anguilla.
The outlook of these credit ratings is stable.
The ratings reflect ECRC’s balance sheet strength, which A.M. Best categorised as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
ECRC’s balance sheet strength is supported by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR).
However, A.M. Best suggested that the company is relatively small with less than $10 million in equity, and consequently, relies heavily on retrocession to manage catastrophe exposure, minimise earnings volatility and protect surplus.
“Potential exposure is reduced to a manageable level by a conservative programme placed with a high-quality panel of reinsurers,” according to A.M. Best.
A.M. Best noted that ECRC continues to provide reinsurance solutions to the St. Kitts Nevis Anguilla Trading and Development Company Limited, the majority owner, and increasingly to other insurance companies operating in the Organization of Eastern Caribbean States.
ECRC’s objective is to enhance operating performance and overall earnings by achieving growth in business that falls within existing treaties without increasing its net retained risk.
However, while ECRC has established relationships with key participants in its target markets, soft market conditions persist for the business in which the company plans to participate.
“In addition, domestic and regional markets face uncertainties and weakened economic conditions as a result of a decrease in tourism and struggling commodity markets,” A.M. Best concluded.
