Moroccan reinsurer Atlantic Re's strong operating performance is demonstrated by a five-year (2020-2024) weighted average return-on-equity ratio and non-life combined ratio of 14.3% and 85.2%, respectively, notes AM Best.
The company’s results have been supported by the good profitability of its domestic Moroccan portfolio, with favourable reserve development stemming from its legacy compulsory cessions business, together with solid investment returns, evidenced by a five-year weighted average investment yield (including gains) of 5.9%.
Prospectively, AM Best expects Atlantic Re's operating performance to remain strong, although exposed to potential volatility, driven by its peak exposures.
AM Best has revised the outlook to ‘Positive’ from ‘Stable’ for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of ‘B++’ (Good) and the Long-Term ICR of ‘bbb’ (Good) of Atlantic Re (Morocco). The outlook of the FSR is ‘Stable’.
These credit ratings reflect Atlantic Re’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The revision of the Long-Term ICR outlook reflects positive pressures on the company’s balance sheet strength assessment, stemming primarily from its improving level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR).
Balance sheet strength
Atlantic Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation being at the strongest level. The company’s BCAR scores have increased in recent years, supported by an increase in unrealised investment gains.
The balance sheet strength assessment factors in Atlantic Re’s high earnings distributions, in the form of dividends to its main shareholder, Caisse de Dépôt et de Gestion (CDG), a state-owned investment vehicle for the Kingdom of Morocco, and as remuneration of the explicit guarantee provided by the Moroccan state, which partially restricts capital generation. Another partially offsetting balance sheet strength factor is the company’s significant asset concentration to Morocco, where it holds over 95% of its investments.
Market position
Atlantic Re has a solid market position in Morocco, reflecting its established role as the national reinsurer, which partially mitigates its limited presence in the global reinsurance market. In 2024, the company reported gross written premium of MAD3.8bn ($389m), of which two-thirds was generated domestically.
Atlantic Re continues to develop its international activity, notably targeting profitable African markets, with its expansion supported by a broadening distribution network through the opening of strategically located representative offices and new partnerships.