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 Dunav-Re a.d.o (Dunav-Re) (Serbia). The outlook of the FSR is stable.

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

The revision of the Long-Term ICR outlook to positive from stable reflects the improving creditworthiness of Dunav-Re’s parent company, Dunav osiguranje a.d.o (Dunav Insurance). In AM Best’s view, Dunav-Re is strategically important to its parent, and Dunav Insurance would be expected to provide prompt and sufficient support to Dunav-Re, if needed.

Dunav-Re’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The assessment considers the company’s solid internal capital generation in recent years and good financial flexibility as a subsidiary of Dunav Insurance. Partially offsetting rating factors include Dunav-Re’s high exposure to Serbia’s financial system, with all of its investments held domestically, as well as its small capital base relative to global standards, which increases the sensitivity of its risk-adjusted capitalisation to potential shocks. Dunav-Re is also dependent on retrocession to manage domestically sourced business; however, the associated risks are mitigated partly by a stable retrocession panel of excellent credit quality.

Dunav-Re has a track-record of strong operating performance, evidenced by a five-year (2020-2024) weighted average return on equity ratio of 20.5%. Despite rapid growth of its international book of business over this period, the company has maintained a robust underwriting performance, illustrated by a five-year (2020-2024) weighted average combined ratio of 84.0%. AM Best expects prospective operating performance to be supported by Dunav-Re’s selective underwriting and stable investment income.

Dunav-Re is a multiline reinsurer domiciled in Serbia, with a dominant position in the local market, where the company generates the majority of its business. While Dunav Re’s profile is complemented by a growing portfolio of internationally sourced business, its scale remains small by global standards.

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