AMSTERDAM–(BUSINESS WIRE)–#insurance–AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and a Long-Tern Issuer Credit Rating (Long-Term ICR) 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.

Polish Re’s very strong level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), conservative and liquid investment portfolio, and good internal capital generation, collectively contribute to an overall assessment of strong by AM Best. Polish Re’s reserves have been historically volatile, stemming largely from motor third-party liability (MTPL) business in Poland, which negatively impacts the company’s balance sheet assessment. Significant growth in gross written premium in 2019 and 2020 contributed to increased volatility of the company’s risk-adjusted capitalisation for those years. However, risk-adjusted capitalisation remains at the very strong level.

Polish Re’s tightened underwriting discipline in recent years has reversed the historically unstable operating performance trend, as evidenced by a five-year average combined ratio of 98.1% (2016-2020). The main source of historical volatility has been the MTPL portfolio, which was put into runoff in 2014. The company reported a net profit of PLN 18.0 million (USD 5.5 million) in 2020 (2019: USD 0.8 million), reflecting a 97.5% combined ratio, supplemented by healthy investment income.

Polish Re benefits from its diversified portfolio offering and long-standing presence across Central and Eastern Europe and the Commonwealth of Independent States, as well as its position as the sole domestic reinsurer in Poland. However, the reinsurer’s operations are fragmented, spanning approximately 40 markets, and its profile is constrained by its lack of scale in any given market. The company has showed a significant expansion in the agricultural business in the recent years.

AM Best considers Polish Re’s ERM to be developed and appropriate for the company’s 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 Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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Contacts

Morgane Hillebrandt

Financial Analyst
+31 20 308 5422
morgane.hillebrandt@ambest.com

Victoria Ohorodnyk
Associate Director
+31 20 308 5432
victoria.ohorodnyk@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
james.peavy@ambest.com