AM Best Affirms Credit Ratings of Nacional de Reaseguros, S.A.
AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of "a" (Excellent) of Nacional de Reaseguros, S.A. (Nacional) (Spain). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Nacional's balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Nacional's risk-adjusted capitalisation remains at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR), primarily supported by modest underwriting leverage. The company's balance sheet strength assessment also reflects its prudent reserving approach, well-diversified investment portfolio and comprehensive retrocession protection covering its domestic and international portfolios, further supported by the Consorcio de Compensación de Seguros in Spain. AM Best expects the company's prospective capital position to benefit from good organic capital generation, supported by a prudent dividend policy.
Nacional's disciplined underwriting approach and relatively modest exposure to natural catastrophes have contributed to consistently strong technical results, demonstrated by a five-year (2018-2022) weighted average combined ratio of 97.1%. Nacional reported a pre-tax profit of EUR 23.5 million in 2022 (2021: EUR 39.8 million). The company's non-life performance deteriorated in 2022, mainly driven by negative results on its international property book. However, these losses were partly compensated by the outstanding performance of its life business, which reported technical profits of EUR 23.5 million (2021: EUR 4.5 million).
Nacional maintains a strong competitive position as a leading reinsurer inSpain. Gross written premium increased by 9.0% to EUR 690.0 million in 2022, driven by the company's stable position in Spain's insurance market, and its prudent expansion strategy in other European countries, coupled with price increases due to hardening market conditions. Nacional has expanded its international activities successfully, targeting small- to medium-sized insurers and mutual companies in Europe. In 2022, foreign business accounted for approximately 33% of Nacional's total premium, compared with 27% in 2014, highlighting the improved geographic diversification of the company's portfolio.
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