|[December 10, 2013]
A.M. Best Affirms Ratings of IRB- Brasil Resseguros S.A.
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating of A-
(Excellent) and issuer credit rating of "a-" of IRB- Brasil
Resseguros S.A. (IRB) (Brazil). The outlook for both ratings is
The ratings reflect IRB's strong business profile in the Brazilian
reinsurance market, solid overall financial performance and excellent
risk-adjusted capitalization. Since the reinsurance market opened in
Brazil, IRB holds the largest market share by a wide margin, despite
intense competition. In recent years, as the Brazilian reinsurance
market has transitioned to a more open market, IRB has enacted various
initiatives to maintain market share and to position itself for
expansion outside of Brazil and Latin America. IRB has completed its
privatization in recent months, when the Brazilian government reduced
its stake in IRB and ceased to be its sole controlling shareholder. This
restructuring should provide IRB with enhanced agility and efficiency.
Overall, IRB continues to have a unique and strong position in the
growing Brazilian (re)insurance market, along with its defined strategy
and experienced personnel to execute its business plans. A.M. Best
recognizes that IRB continues to be in a state of transition and will
closely monitor this phase of its development.
Rating factors that could cause an upgrade to IRB's ratings and/or
revise the outlook to positive include maintenance of a strong
risk-adjusted capital oupled with a strong operating performance.
Partially offsetting these positive rating factors are sustained and
significant competitive market pressures on IRB as more reinsurance
companies enter the Brazilian market each year, as well as potentially
new or altered regulatory requirements, which may or may not be
favorable to the company. The aforementioned challenges and other rating
factors, which could lead to a downgrading of the ratings and/or a
revision of the outlook to negative include a material loss of capital,
whether it is driven by investment losses or underwriting losses,
increased volatility with regards to operating performance relative to
other market participants or a material decline in the company's
risk-adjusted capital if, for example, premium growth is pursued in a
manner that strains its claims paying ability.
In Latin America, Brazil offers the largest (re)insurance market. It has
the largest population in South America and is among the 10 largest
economies in the world by gross domestic product. Currently, Brazil has
a low insurance penetration and a favorable economic environment, which
represents significant growth potential, making it an attractive place
for (re)insurance companies. In Brazil, reinsurance companies fall into
three categories depending on a company's participation and financial
commitment: "local," "admitted" and "occasional." IRB is a "local"
reinsurance company and up until 2007, when the Brazilian reinsurance
market was opened to international reinsurance companies, it was privy
to a long-standing monopoly. IRB has predominately operated as a
property/casualty reinsurer with a small amount of life business.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
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.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS
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