AM Best Rating Services, a global credit rating agency focused solely on the insurance and reinsurance sector, reported yesterday (December 16th) that it has maintained IRB Brasil RE’s Financial Strength Rating at “A-” (Excellent) and the Long-Term Issuer Credit Rating at “a-”. “The maintenance of the rating is a recognition that the company’s financial recovery and credibility measures are producing results,” says Carlos Guerra, Executive Vice-President, Risks, Compliance and Legal, at IRB Brasil RE.
According to AM Best’s analysis, IRB Brasil RE’s balance sheet has been assessed as “strongest”. In turn, operating performance, according to the analysis, starts showing a favorable trend, with the ongoing efforts to restructure the business portfolio. “It is considered adequate when compared to its peers,” says AM Best, also emphasizing the influence of macroeconomic issues on the figures and the reinforcement of provisions made by the company.
AM Best also stresses that IRB Brasil RE is the dominant player in Brazil, with its diversified business lines and “neutral” profile. Regarding corporate risk management, the analysis considers it “appropriate” and highlights the arrival of the new CEO, Raphael de Carvalho, and CFO, Willy Jordan, as well as the appointment of a dedicated Chief Risk Officer, Daniel Volpe, direct reporting to the CEO, and the presence of eight independent members on the Board of Directors. “AM Best recognizes that the IRB has taken many actions to strengthen its structures and governance, and these improvements have helped stabilize its operations,” says the report.
The “negative” outlook assigned by AM Best, according to the document, occurs because, “despite recent operational and structural improvements, the expected benefits are not yet apparent in operating performance.”
In September, another credit rating agency, Standard&Poor’s Global Ratings, also kept IRB Brasil RE’s issuer credit rating at “brAAA” on the Brazilian National scale, with a stable outlook. In a report at the time, S&P said it has conferred a stable outlook on the rating as it expects the operating performance of IRB to “stabilize in coming two years.”