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AM Best Affirms Credit Ratings of Compañía Reaseguradora del Ecuador S.A.

AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Compañía Reaseguradora del Ecuador S.A. (Ecua Re) (Ecuador). The outlook of these Credit Ratings (ratings) is positive.

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

The positive outlooks result from the strengthening of Ecua Re’s capital position, backed by the strongest level of risk-adjusted capitalization and a growing capital base.

Ecua Re was established in 1977 and is the only domestic reinsurer operating in Ecuador. The company provides reinsurance solutions for the country’s domestic insurers. The company’s business portfolio is composed mostly of property risks, mainly fire and auto, with a small component of casualty and life risks. Ecua Re has started an internationalization process that will lead to foreign reinsurer status in selected markets. The company benefits from recent regulatory changes in Ecuador allowing primary insurers to cede personal lines business, which was restricted previously.

Ecua Re’s largest shareholder is Hannover Rück SE (Hannover Re), which has a 30% ownership stake via its wholly owned subsidiary, FUNIS GmbH & Co. KG; other local leading insurers hold approximately a 40% stake in the company. Ecuador’s economic prospects have improved in 2021 and 2022 due to a favorable market perception of the new government; finally reflecting in a volume of premiums higher than those before the COVID-19 pandemic. For 2023 and into 2024, AM Best will continue to assess the impact of economic developments in Ecuador’s insurance market, as well as new market dynamics that result from new businesses opening, and changes in regulations in the domestic reinsurance space. Partially mitigating AM Best’s concern over Ecuador’s economic environment is that Ecua Re’s business profile benefits from its ownership, which provides access to quality business while at the same time maintaining reinsurance capacity through its main shareholder.

AM Best assesses Ecua Re’s balance sheet strength as strongest, as risk-adjusted capitalization reflects the company’s ability to manage its risk exposures, supported by a comprehensive reinsurance program led by Hannover Re. Furthermore, the company gains financial flexibility through an Ecuador law that requires shareholders with a stake higher than 12% to assume additional financial responsibility in the event of insufficient shareholders’ funds. Ecua Re’s capital volume has continued to strengthen despite a substantial amount of dividends paid in relation to net income, reflecting the capacity of the company to generate net results. AM Best considers Ecua Re’s ERM practices to be appropriate, given the company’s comprehensive and appropriate risk framework.

AM Best views Ecua Re’s operating performance as strong, given its consistent positive technical performance during the past five years, and its capability to generate revenue from market opportunities in a profitable manner. Additionally, its retrocession profile provides revenue from ceding commissions and mitigates claim costs, as experienced in the 2016 earthquake. As of July 2023, the company posted a combined ratio of 86.19%.

Positive rating actions could take place if the company can increase its capital base in a stable manner while achieving the strongest level of risk-adjusted capitalization, backed up by strong operating performance. Negative rating actions could take place if the company’s operating performance deteriorates to levels no longer supportive of the strong assessment either through market developments or changes in underwriting.

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 specializing 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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