AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of IRB-Brasil Resseguros S.A. (IRB) (Rio de Janeiro, Brazil). The outlook of these Credit Ratings (ratings) is negative.

The ratings reflect IRB’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

AM Best’s concerns with the company’s capital adequacy have been mitigated to some degree following the completion of its capitalization offer and improvement in its risk-adjusted capitalization levels, as measured by Best’s Capital Adequacy Ratio (BCAR). The negative outlooks reflect that while IRB has improved its operating performance, a material interruption or deviation on such trend most likely will lead to a rating downgrade.

IRB maintains a balance sheet strength level that fits in AM Best’s strongest assessment range. Surplus has grown over the past five to six years and BCAR scores are in the top category for a company at this rating level. The balance sheet also benefits from protection via a retrocession program with highly rated reinsurers that limits IRB's net exposures to manageable levels.

AM Best assesses IRB’s operating performance as adequate due to the changes in its results. Throughout 2023, the company has improved its operating performance through refining its portfolio cleanup, which aided in the recovery from its performance in prior years.

IRB is the dominant insurance market participant in Brazil. As of December 2022, IRB had almost 40% share of Brazil’s domestic reinsurance market. IRB ranked into the mid-range of AM Best’s most recent Global Reinsurance Top 50 ranking for 2023 at No. 38.

AM Best acknowledges that IRB has taken many steps to reinforce its ERM and governance structure, and these improvements helped stabilize its operations. AM Best recognizes that the changes are starting to show a trend of improvement in the company’s underwriting performance.

A factor that could lead to negative rating action are Brazil’s macroeconomic conditions, which could contribute further to a deterioration of IRB’s operating performance and become an obstacle to its ability to raise capital if needed. Positive rating actions could take place if the company continues to show improvements in its operating performance by implementing its transformation strategy.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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