AM Best affirms credit ratings of Gaviota Re S.A.

AM Best has affirmed the Financial Strength Rating of A- (Excellent) of Gaviota Re, a captive serving Repsol, a Spanish multi-energy company engaged in worldwide upstream, downstream and low carbon generation activities.

The ratings reflect Gaviota’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Gaviota’s balance sheet strength is underpinned by its risk-adjusted capitalisation comfortably above the threshold for the strongest assessment, as measured by Best’s Capital Adequacy Ratio (BCAR), and is expected to remain at this level. An offsetting factor in the balance sheet strength assessment is Gaviota’s high level of reinsurance dependence, which is mitigated partially by its long-standing relationships with reinsurers of excellent credit quality.

Gaviota is exposed to credit risk driven by inter-company loans with Repsol, which also acts as a partially offsetting factor in the assessment. As of 31 December 2024, the funds Gaviota allocated to the inter-company loans with Repsol represented 54% of the company’s total assets.

Gaviota is a key part of Repsol’s risk management framework, providing mainly property and liability cover for the group’s activities. Although the company’s business portfolio is concentrated by product, with the majority of premiums accounting for property risks, the book is well-diversified by geography, reflecting the international scope of the parent’s operations.

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