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FOR IMMEDIATE RELEASE
LONDON - JUNE 01, 2010 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating of B+ (Good) and the issuer credit rating of "bbb-" of Bosna Reosiguranje d.d. Sarajevo (Bosna Re) (Bosnia and Herzegovina). The outlook for both ratings remains stable.
The rating of Bosna Re reflects its strong risk-adjusted capitalisation, stable underwriting performance and dominant domestic business position.
A.M. Best believes that Bosna Re's risk-adjusted capitalisation remains strong and continues to be supportive of the company's ongoing moderate growth plans. Bosna Re's capital level is well protected by a comprehensive retrocession programme, placed with securely rated companies.
Bosna Re's underwriting performance remained profitable in 2009 and showed positive results, similar to year 2008 with a moderate combined ratio of 97.4% (92.6% in 2008) and a loss ratio of 67.2% (59.8% in 2008). Going forward, A.M. Best expects ongoing stabilisation of underwriting performance (volatility was experienced in years prior to 2007) and a return to a slightly higher combined ratio of 95%-96%. The effects of the new reserving system implemented in 2006 are still to be fully developed, although technical reserves are showing less variability than in prior periods. A.M. Best believes that Bosna Re's overall performance will continue to be positive (BAM 2.6 million in 2009) and is likely to be derived from both investment income and underwriting income. A.M. Best is of the opinion that Bosna Re has a strong position in the domestic market, having generated a healthy premium of BAM 46.1 million in 2009. A.M. Best believes that Bosna Re is likely to experience similar premium volumes in the next two years.
A.M. Best believes that Bosna Re has maintained its presence in Bosnia and Herzegovina with its 85% market share (85% in 2008) and relationships with the local market. The company's insurance portfolio mix is relatively limited and mostly dominated by two main traditional lines of business—motor (37% of gross written premiums) and property (42% of GWP). A.M. Best does not anticipate any substantial changes to the portfolio composition in the next two years.
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.