AM Best Affirms Credit Ratings of Nova Casiopea Re S.A.

AMSTERDAM–(BUSINESS WIRE)–#insurance–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Nova Casiopea Re S.A. (NCRe) (Luxembourg). The outlook of these Credit Ratings (ratings) is stable.

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

NCRe is a pure captive reinsurer of Telefónica, S.A. (Telefónica), a Spanish multinational broadband and telecommunications provider with operations in Europe, as well as North, Central and South America. NCRe began operations in 2017, replacing Casiopea Re S.A. (CRe) as Telefónica’s main reinsurance captive. Since inception, NCRe has assumed CRe’s liabilities and mirrored its operations. NCRe is dependent on Telefónica for its business. While NCRe’s operations are diverse by line of business and geography, premium volumes remain constrained by Telefónica’s operations and strategic decisions.

NCRe’s balance sheet strength assessment is underpinned by the strongest level of risk-adjusted capitalisation, on both standard and catastrophe-stressed basis, as measured by Best’s Capital Adequacy Ratio (BCAR). The assessment is supported by NCRe’s conservative and liquid investment portfolio, as well as capital buffers in the form of equalisation reserves. An offsetting factor is the company’s elevated exposure to natural catastrophe risk, which has the potential to introduce volatility to capitalisation levels.

NCRe’s operating performance assessment reflects AM Best’s expectation that NCRe’s prospective earnings will mirror the track record of the captive’s predecessor (CRe), which generated healthy albeit fluctuating returns. In 2020, NCRe generated a pre-tax profit of EUR 21.3 million, benefiting from a very low loss ratio of 21.4%, compared with 59.0% (2019), which was mainly driven by low frequency and severity of claims. In 2019, NCRe’s underwriting results were negatively impacted by two large claims related to Chile’s civil unrest and protests. In 2020, the captive’s combined ratio was 44.9%, below CRe’s historical five-year weighted average of 85.4% (2012-2016).

Telefónica’s new business model has not affected the captive’s performance. However, AM Best notes that potential spin-offs of Telefónica’s major businesses in Latin America will likely impact the captive’s risk exposure. In 2021, NCRe has increased some of its net exposures in response to hardening reinsurance market conditions, reflecting the captive’s strategic importance to the group as a cost-effective risk management tool.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit

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

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


Giannina Carbajal Ortiz

Financial Analyst
+31 30 308 5428

Dr. Angela Yeo
Senior Director, Analytics
+31 20 308 5421

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644

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