AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of "a-" of Polskie Towarzystwo Reasekuracji S.A. (Polish Re) (Poland). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Polish Re's balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). The ratings also reflect the lift Polish Re receives due to the support provided by its ultimate parent, Fairfax Financial Holdings Limited (Fairfax), in particular, the explicit parental guarantee in place for Polish Re. In addition, Fairfax provides technical support in areas such as reserving, retrocession protection and investment management services.
Polish Re's very strong level of risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), conservative and liquid investment portfolio, and good internal capital generation, collectively contribute to an overall balance sheet assessment of strong by AM Best. Polish Re's reserves have been historically volatile, stemming largely from motor third-party liability (MTPL) business in Poland, which negatively impacts the company's balance sheet assessment. Polish Re's risk-adjusted capitalisation decreased in 2019, in comparison with 2018, driven by the company's significant top-line growth of approximately 39%, but remains at the very strong level.
Polish Re's tightened underwriting discipline in recent years has reversed the historically unstable operating performance trend, as evidenced by a five-year average combined ratio of 98.3% (2015-2019). The main source of historical volatility has been the MTPL portfolio, which was put into run-off in 2014. The company reported a net profit of PLN 3.02 million (USD 0.8 million) in 2019, reflecting a 99.9% combined ratio, supplemented by healthy investment income. The 2019 results were impacted negatively by property losses due to multiple natural catastrophe events, including earthquakes in Albania and a mudslide in Georgia.
Polish Re benefits from its diversified portfolio offering and long-standing presence across Central and Eastern Europe and the Commonwealth of Independent States, as well as its position as the sole domestic reinsurer in Poland. However, the reinsurer's operations are fragmented, spanning approximately 40 markets, and its profile is constrained by its lack of scale in any given market.
AM Best considers Polish Re's ERM to be developed and appropriate for the company's risk profile and operational scope.
This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.
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Contacts:
Victoria Ohorodnyk
Senior Financial Analyst
+31 20 308 5432
victoria.ohorodnyk@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Mathilde Jakobsen
Director, Analytics
+31 20 308 5427
mathilde.jakobsen@ambest.com
Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com
