AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” (Good) to Luxembourg-based Cowen Reinsurance SA (Cowen Re). These credit ratings have been placed under review with negative implications, due to the uncertainty regarding Cowen Re's future ownership. This follows its acquisition by The Toronto-Dominion (TD) Bank in March 2023. AM Best does not expect the company to form part of TD Bank’s long-term plans. AM Best says the ratings reflect Cowen Re’s balance sheet strength, which AM Best assesses as “very strong”, as well as its “adequate operating performance, limited business profile and appropriate enterprise risk management.” Cowen Re’s balance sheet strength is supported by its risk-adjusted capitalisation at the strongest level, as measured by AM Best’s capital adequacy ratio. AM Best expects Cowen Re’s risk-adjusted capitalisation to remain at the strongest level prospectively, supported by low underwriting leverage. An offsetting factor is the company’s limited quality of assets, due to its substantial holdings of intercompany loans and receivables. However, AM Best says it expects the quality to improve in 2023, as the company reduces its exposure to intra-group investments and loans. In 2022, Cowen Re reported a pre-tax loss of US $5.9 million. Since starting its operations in 2016, Cowen Re’s operating performance has been ‘volatile’. The cumulative pre-tax result since inception, as calculated by AM Best, is a $6 million loss with modest technical losses being partially offset by positive investment return. AM Best’s business profile assessment of Cowen Re reflects the company’s weak market position in a large and highly competitive international reinsurance market. Cowen Re’s gross written premium amounted to $24 million in 2022. The company writes non-life, short-tail business globally, with a focus in Europe and emerging markets.
