S&P Global Ratings has expressed a positive view on Arundo Re’s strategic growth ambitions, assigning the international reinsurer a financial strength rating of ‘A’ with a stable outlook.

The credit rating agency highlighted Arundo Re’s (formerly known as CCR Re) potential for sustained profitability and expansion backed by its majority shareholders.

Arundo Re has been majority held by a consortium of French mutuals comprising Societe mutuelle d’assurance du batiment et des travaux publics (SMABTP) and MACSF.

Currently, SMA group holds 56% of the shares, MACSF group 19%, and Caisse Centrale de Réassurance the remaining 25%. A&P noted that the latter has a put option to sell its shares in 2026.

“We believe that SMABTP has the willingness and capability to support Arundo Re’s reinsurance activities in case of need. As such, we view Arundo Re as a strategically important subsidiary of SMABTP. This is reflected through an additional notch of support in the final rating on Arundo Re,” the rating agency stated.

S&P believes that the reinsurer has demonstrated the ability to generate strong earnings and maintain technical performance. It expects the company’s revenue will continue to rise in the next few years, in line with its strategic plan to reach €2 billion gross written premiums (GWP) by 2027.

Full-year 2024 results also reflected this trend, with a 13% increase in GWP, approximately €1.4 billion, compared with 2023. S&P anticipates this revenue growth will continue, with net combined rations expected to be around 98% on average over the next few years, benefiting from the current favourable hard market.

S&P believes Arundo Re capitalisation will remain excellent. It stated: “Despite the ambitious growth plan, we expect capital adequacy to remain excellent in the next two years, supported by a conservative investment strategy, a prudent reserving policy, and retained earnings. The regulatory solvency ratio using the standard formula stood at 211% at year-end 2024 and remains in the reinsurer’s so-called “optimal zone” between 180% and 220%.”

The credit rating agency also highlighted that the stable outlook assigned to the reinsurer reflects its belief that “it will remain strategically important to SMABTP and maintain a satisfactory level of profitability and an excellent capital position over the next two years.”

“We could lower our ratings on Arundo Re by one notch if we were to downgrade SMABTP over the next two years. We could also take this action if Arundo Re sustainably failed to meet our expectations in terms of profitability, leading to a material deterioration of its capital position. This could happen if there was a significant deviation from our expectations, notably arising from unexpected claims related to catastrophic events,” S&P warned.

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