AM Best


AM Best Affirms Credit Ratings of Black Gold Re Limited


CONTACTS:

Juan Pablo Castro
Associate Financial Analyst
+52 56 5113 8842
juanpablo.castro@ambest.com

Eli Sanchez
Director, Analytics
+52 55 9085 7503
eli.sanchez@ambest.com
Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310
christopher.sharkey@ambest.com

Al Slavin
Senior Public Relations Specialist
+1 908 882 2318
al.slavin@ambest.com

FOR IMMEDIATE RELEASE

MEXICO CITY - MARCH 21, 2024 05:53 PM (EDT)
AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Black Gold Re Limited (BGRe) (Bermuda). The outlook of these Credit Ratings (ratings) is stable.

BGRe is a captive reinsurer of Ecopetrol S.A. (Ecopetrol) [NYSE: EC], a Colombia-based integrated energy company that is 88.49% owned by Colombia’s government.

The ratings of BGRe reflects its 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 (ERM). The ratings also recognize the importance of the company within Ecopetrol’s strategy.

BGRe’s very strong level of balance sheet strength reflects its capital management strategy and ability to build up capital. The company has low net underwriting leverage, creating dependence on reinsurance; however, these associated risks are mitigated partly by a diversified mix of well-rated reinsurers. AM Best expects BGRe to maintain a capital buffer as it continues to adjust its risk appetite to the reinsurance needs of its parent company, as well as the overall reinsurance market conditions.

BGRe’s operating performance is characterized by profitable technical results backed by well-established underwriting principles and considerable revenue from ceding commissions. Over the past few years, the company has complemented its net profit with investment results; however, dependence on this revenue is low. AM Best expects the company to continue backing its results with its technical performance.

AM Best views the company’s business profile as neutral. BGRe has access to a wide scope of insured risks given the relevance of Ecopetrol to the oil and gas industry in the Americas. However, the company’s underwriting risks are concentrated in Colombia. BGRe’s ERM is well-integrated within Ecopetrol and is important to the group as a cost-effective risk management tool.

The stable outlooks reflect AM Best's expectation that BGRe will continue to adjust its risk appetite and tolerance levels that support its parent company’s needs in terms of volume of capital and underwriting capabilities.

Positive rating actions could result if there is a sustained favorable trend in operating performance as the company’s strategy continues to adapt to the reinsurance market. Negative rating actions could occur if business flow is limited by any change in its holding company or if the financial situation of the parent company is compromised by any sociopolitical or economic event. Negative rating actions could also take place if the balance sheet strength of the company is further stressed by the materialization of any risk exposure.

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 www.ambest.com/captive.

The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Jan. 18, 2024), which provides a comprehensive explanation of AM Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:


  • Alternative Risk Transfer (ART) (Version Feb. 8, 2024)

  • Evaluating Country Risk (Version May 4, 2023)

  • Understanding Global BCAR (Version March 7, 2024)

  • Catastrophe Analysis in AM Best Ratings (Version Feb. 8, 2024)

  • Available Capital & Insurance Holding Company Analysis (Version Jan. 18, 2024)

  • Scoring and Assessing Innovation (Feb. 27, 2023)

 View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, relevant sources of information and the frequency for updating ratings, please refer to Guide to Best’s Credit Ratings.


  • Previous Rating Date: Feb. 16, 2023

  • Initial Rating Date: Feb. 8, 2022

  • Date Range of Financial Data Used: Dec. 31, 2018-Dec. 31, 2023

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to rating(s) that have been published on AM Best's website. For additional 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.

If the ratings referred in this press release do not indicate a specific country suffix, it is understood that they are granted globally and not on a national scale.

AM Best does not validate or certify the information provided by the client in order to issue a credit rating.

While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. AM Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.   

AM Best’s credit ratings are independent and objective opinions, not statements of fact. AM Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. AM Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

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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.                                                   


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AMB# Company Name
074848 Black Gold Re Limited