AM Best, the credit rating agency, has changed the outlook on the Long-Term Issuer Credit Rating (Long-Term ICR) of Dunav-Re a.d.o (Dunav-Re), based in Serbia, from stable to positive.
At the same time, the agency affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb” (Good). The outlook on the FSR remains stable.
These ratings are based on AM Best’s assessment of Dunav-Re’s balance sheet as strong, alongside consistent financial performance, a modest business footprint, and what AM Best considers to be appropriate risk management practices.
The improved outlook for the Long-Term ICR reflects better credit indicators from Dunav-Re’s parent company, Dunav osiguranje a.d.o (Dunav Insurance).
According to AM Best, Dunav-Re remains closely linked to its parent and is likely to receive support from Dunav Insurance if necessary.
The company’s balance sheet strength is supported by risk-adjusted capital levels measured at the highest category under AM Best’s Capital Adequacy Ratio (BCAR). This includes moderate internal capital generation in recent years and access to some financial backing from its parent.
However, Dunav-Re’s full reliance on Serbia’s financial markets for its investments, combined with a relatively small capital base by global standards, limits its financial flexibility and increases its exposure to potential market disruptions.
The company also depends on retrocession to manage risk exposure, although it works with a group of well-rated reinsurers to offset this risk.
Dunav-Re’s operating results have been stable, with a five-year average return on equity of 20.5% and a combined ratio of 84.0% between 2020 and 2024.
While the company has expanded internationally during this time, its size and resources remain limited. AM Best expects future performance to stay within a similar range, assuming continued cautious underwriting and consistent investment income.
