AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Polskie Towarzystwo Reasekuracji S.A. (Polish Re) (Poland). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Polish Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The ratings also reflect the lift Polish Re receives due to the support provided by its ultimate parent, Fairfax Financial Holdings Limited (Fairfax), in particular the explicit parental guarantee in place for Polish Re. In addition, Fairfax provides technical support in areas such as reserving, retrocession protection and investment management services. Fairfax’s commitment to Polish Re was demonstrated by the PLN 78 million (USD 18 million) capital injection in 2023.

Polish Re’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), was at the very strong level at year-end 2023, and AM Best expects it to be maintained at this level prospectively. Whilst prospective capital adequacy remains exposed to potential volatility from high premium growth and, to a lesser extent, operating performance, financial support from Fairfax is expected to be forthcoming to address future capital needs. Additionally, Polish Re has historically experienced volatility in reserve development, stemming largely from motor third-party liability business in Poland and requiring reserve strengthening in the past four years. The company benefits from a conservative and liquid investment portfolio.

Polish Re’s adequate operating performance track record is demonstrated by a five-year (2019-2023) average combined ratio of 96.7% (as calculated by AM Best) and a five-year (2019-2023) average return-on-equity ratio of 6.2% (as calculated by AM Best). The company reported a net profit of PLN 62.2 million (USD 15.8 million) in 2023, supported by robust underwriting performance, as evidenced by a combined ratio of 92.4% (as calculated by AM Best). This compares with a net loss of PLN 5.7 million in 2022 (USD -1.3 million), driven mainly by realised investment losses. Prospectively, investment income is expected to increasingly contribute to operating profitability due to rising interest rates, following the company's asset shift.

Polish Re benefits from a diversified underwriting portfolio, with operations spanning approximately 40 markets. The company’s largest markets based on gross written premium in 2023 are Poland, Israel and Turkey. Additionally, the company has expanded its agriculture line of business significantly in recent years.

AM Best considers Polish Re’s ERM to be developed and appropriate for the company’s risk profile and operational scope.

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.

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