AM Best has downgraded the financial strength rating (FSR) to B++ (Good) from A- (Excellent) of Istmo Compañía de Reaseguros (Istmo Re), Aseguradora del Istmo (ADISAP), and Liffey Reinsurance (Liffey Re).
AM Best has placed the ratings under review with negative implications.
AM Best said the action taken for Istmo Re reflect the company’s deterioration in financial flexibility derived from increasing financial leverage, limited growth prospects and a downward trend in operating performance, reaching negative levels at year-end 2015.
Liffey Re’s downgrade and under review status reflect the full dependence of the company on Istmo Re’s business as its captive retrocessionaire and deterioration in operating performance.
Liffey Re’s ratings will move in tandem with those taken on Istmo Re.
Furthermore, the rating downgrades of ADISAP and Liffey Re mirror the actions taken on their parent company, Istmo Re, given their integration and strategic view for the group. Partially mitigating the previous negative rating drivers, the companies’ risk-adjusted capitalisation remains strong.
The under review with negative implications status reflects the still-developing actions being executed by the group in order to diminish its financial leverage.
Istmo Re’s risk-adjusted capitalisation remains strong but continues to experience pressure given the burden from its financial leverage and negative bottom-line results expected at year-end 2016.
AM Best, Istmo Re, ADISAP, Liffey Re, Ratings, Insurance, Reinsurance, Captives, Ireland, Latin America