AM Best Revises Outlooks to Negative, Affirms Credit Ratings of Reunion Re Compañia de Reaseguros S.A.

AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of Reunion Re Compañia de Reaseguros S.A. (Reunion Re) (Argentina).

These Credit Ratings (ratings) reflect Reunion Re’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.

The negative outlooks for the company reflect the pressure applied on its balance sheet strength caused by the influence of the rating unit's holding company coupled with the macroeconomic challenges in Argentina. As of March 2025, the ultimate parent, La Holando Sudamericana Compania de Seguros S.A, of Reunion Re continues to experience pressure on its balance sheet strength mainly due to the negative impact stemming from the country’s currency devaluation resulting in a weak balance sheet strength assessment.

Reunion Re’s balance sheet strength remains underpinned by its risk-adjusted capitalization being at the very strong level, as measured by Best´s Capital Adequacy Ratio (BCAR). The ratings also reflect the company’s consistent profitability in its technical results despite a volatile economic environment. Other positive rating factors include the company’s well-structured and diversified reinsurance program, its seasoned management team and synergies provided by its main shareholder. Partially offsetting these positive rating factors is the historic volatility in Reunion Re’s bottom line results due to operating in Argentina´s challenging macroeconomic environment and fluctuations in its retrocession leverage stemming from reinsurance recoverables and ceded premium. Reunion Re initiated operations in Bueno Aires, Argentina in 2012. The company operates through a network of brokers and direct distribution channels mainly in Argentina, but also has a presence in South and Central America.

Historically, Reunion Re has increased capital supported by positive bottom-line results; this is driven by a consistent inflow of underwriting and investment income, which reflects the management team’s market knowledge and well-rounded experience in Argentina. A well-balanced reinsurance program placed among counterparties with a strong credit quality level also reinforces the company’s risk-adjusted capitalization and diminishes its credit risk exposure. In AM Best´s view, current capital levels are pressured by the credit quality of Reunion Re´s investment portfolio given the prevailing macroeconomic uncertainty and exchange rate fluctuation exposure.

AM Best believes the reinsurer has shown disciplined underwriting in a highly volatile market, which is driven by inflation and foreign exchange rate pressures. Historically, Reunion Re has managed to maintain overall profitability despite the negative effects derived from non-recurring adjustments in premium reporting, capital controls and public debt restructuring. By year-end 2024, the company reported negative bottom-line results, mainly driven by losses caused by a currency devaluation of the Argentinian Peso that affected the overall insurance industry. In addition, Reunion Re continues to show negative technical and bottom-line results as of March 2025, showing combined ratios above 100%, in conjunction with negative financial results. AM Best expects an improvement in its operating performance as the company takes cautious practices to hedge against the currency devaluation in the country to reach Reunion Re’s forecast.

Factors that could lead to negative rating actions include a deterioration of Reunion Re 's risk-adjusted capitalization to levels no longer supportive of its ratings, in light of current macroeconomic risks that could pressure AM Best’s view of Reunion Re’s balance sheet strength. Additionally, negative rating actions could take place if the holding company financial condition continues to deteriorate causing negative influence and pressure on the rating unit. While highly unlikely, positive rating actions could occur if the capital base expands to levels supportive of the strongest balance sheet strength assessment.

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.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing 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 www.ambest.com.

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