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AM Best Affirms Credit Ratings of AzRe Reinsurance, OJSC

AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of AzRe Reinsurance, OJSC (AzRe) (Azerbaijan). The outlook of these Credit Ratings (ratings) is stable.

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

AzRe’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as a conservative investment portfolio by asset type and sufficient liquidity. Offsetting factors include the vulnerable credit quality of the company’s bond portfolio and exposure to the high financial system risk in Azerbaijan. While the proportion of profits that AzRe distributes as dividends varies, AM Best expects its future earnings retention to be sufficient to support premium growth and allow the company to maintain its strongest level of risk-adjusted capitalisation, as measured by BCAR.

AzRe has achieved strong operating results in recent years, as demonstrated by a five-year (2018–2022) weighted average return on equity of 19.8%. Total earnings are supported by strong investment returns, reflective of Azerbaijan’s high interest rate environment. The company benefits from relatively low loss ratios in Azerbaijan, which have supported a solid underwriting performance, as demonstrated by a five-year (2018-2022) average non-life combined ratio of 73.8% (as calculated by AM Best). However, prospective technical performance is subject to potential volatility due to exposure to large losses from international risks for which AzRe retains most of the underwriting risk.

AzRe is one of the leading players in the local (re)insurance market where it benefits from its profile as Azerbaijan’s only specialised reinsurer. The company’s business profile is constrained by geographical concentration and the small size of its portfolio by international standards. AM Best notes that AzRe has taken steps to grow its top line by targeting new reinsurance segments domestically and expanding in foreign markets, where it has the potential to benefit from increasing reinsurance premium rates. AM Best will continue to monitor the progress of the company’s expansion strategy and the subsequent development of its ERM capabilities.

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.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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