AM Best assigns B++ to Balboa Re, a Turks and Caicos captive

AM Best assigned Balboa Reinsurance, a Turks and Caicos captive within BSC Financial Group, a B++ (Good) financial strength rating and a bbb+ long-term issuer credit rating. The outlooks are stable, the rating agency said Oct. 30.

AM Best said balance sheet strength is strong, supported by risk-adjusted capitalization under its BCAR measure, a reinsurance program and conservative investment policies. The agency rated operating performance as adequate, business profile as limited and enterprise risk management as appropriate. The agency also counts Balboa Re's affiliation with Seguros e Inversiones, S.A. and its guarantee as rating strengths.

The main offset is the captive structure: Balboa Re reinsures insurance programs tied to the portfolios of Banitsmo, which AM Best calls the largest banking entity of the group. For allocators, the credit exposure is to a single parent rather than a diversified book of cedents.

AM Best said a downgrade could follow if Balboa Re becomes less strategically important to its parent or if its capital base deteriorates. A downgrade could also follow if capital fails to keep pace with an evolving risk profile through underperformance, significant capital outflows or less prudent capital management. An upgrade could follow if improved fundamentals prove sustainable while capital grows.