Active Re retains rating, outlook stable amid strong performance

Active Re retains rating, outlook stable amid strong performance | Insurance Business Asia

Reinsurance

Active Re retains rating, outlook stable amid strong performance

Affirmation reflects consistent underwriting practices and a solid capital structure

Reinsurance

By
Kenneth Araullo

AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent) for Active Capital Reinsurance, Ltd (Active Re), based in Barbados. The outlook for these credit ratings remains stable.

These ratings are based on Active Re’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile, and appropriate enterprise risk management (ERM).

The stable outlook also reflects the company’s ability to maintain sound operating performance, supported by consistent underwriting practices and a solid capital structure.

The affirmation of Active Re’s ratings is attributed to its stable profitability, bolstered by a focused underwriting strategy that adapts to economic conditions and delivers strong operating performance relative to its peers.

Additionally, Active Re’s reinsurance program and risk management framework are deemed adequate for its risk profile. However, the company operates in a competitive environment in its targeted geographic markets, which it addresses through global expansion.

Established in 2007 and based in Barbados, Active Re is a reinsurer with a portfolio at year-end 2023 comprising property/casualty (44%), surety (15%), and affinity (41%) net premiums written (NPW).

The company has a diverse geographic presence in Latin America, the Middle East, Europe, and Asia Pacific, focusing on short-term non-catastrophe risks. Active Re continues to adapt to the current economic landscape by innovating internal processes to enhance decision-making.

Active Re’s capital base has consistently grown through reinvestment of earnings and capital contributions, maintaining its risk-adjusted capitalization at the strongest level.

The company’s conservative underwriting leverage is evidenced by an NPW-to-surplus ratio of 1.4x. However, Active Re’s ratings could face pressure from uncertainties related to future underwriting performance as the company expands into new geographic markets, automatic contracts, and managing general agents.

In 2023, while expanding its business, Active Re managed to maintain bottom-line results by controlling acquisition expenses. The company has focused on quality underwriting, allocating acquisition expenses to delegated underwriting authorities with strong technical performance. As of June 2024, Active Re continues to report underwriting metrics consistent with its 2023 performance.

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