AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of "a-" (Excellent) 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 assesses 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. Fairfax's commitment to Polish Re was demonstrated by its PLN 78 million (USD 18 million) capital injection in 2023.
Polish Re's risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), improved to the strongest level at year-end 2024, from very strong in 2023. Risk-adjusted capitalisation remains subject to volatility from growth levels and financial performance. An offsetting factor has been the elevated volatility in reserve development in recent years, stemming largely from motor third-party liability business (MTPL) in Poland. However, in 2024, this concern was reduced as the MTPL runoff developed positively for the first time. This assessment also reflects the financial support from Fairfax, which is expected to be forthcoming to address future capital needs.
Polish Re's adequate operating performance assessment is supported by a five-year (2020-2024) average combined ratio of 96.7% (as calculated by AM Best) and a five-year (2020-2024) average return-on-equity ratio of 8.4% (as calculated by AM Best). The company's underwriting performance slightly deteriorated in 2024, as evidenced by a combined ratio of 97.8% (2023: 92.4%) (as calculated by AM Best). Robust investment results supported an overall net profit of PLN 54.2 million (USD 13.2 million). Prospectively, investment income is expected to be a consistent contributor to profitability.
Polish Re benefits from a diversified underwriting portfolio, with operations spanning approximately 40 markets. The company's largest markets, as based on gross written premium in 2024, are Poland, Israel and Turkey. Additionally, the company has expanded its agriculture line of business significantly in recent years.
AM Best considers Polish Re's ERM to be developed and appropriate for its 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 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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