AM Best has downgraded the Financial Strength Rating to C+ (Marginal) from B- (Fair) and the Long-Term Issuer Credit Rating to “b-” (Marginal) from “bb-” (Fair) of Berking Re Limited (Berking Re) (Bermuda). Concurrently, AM Best has maintained the under review with negative implications status for these Credit Ratings (ratings).

The ratings reflect Berking Re’s balance sheet strength, which AM Best assesses as adequate, as well as its marginal operating performance, limited business profile and marginal enterprise risk management. The ratings also consider the weakened credit fundamentals and heightened risk in replenishing financial resources, as well as the execution of business and capital plans by the parent company, PFY Health Technology Co., Ltd (PFY Cayman or PFY Group), which has resulted in a drag on Berking Re’s ratings.

The rating downgrades reflect AM Best’s view that Berking Re is exposed to a heightened level of potential negative contagion risk from PFY Cayman as the group continues to experience adverse financial and business developments, as well as weakened financial flexibility in the current capital structure in recent years. The parent group has a short operational history, while its capital position is limited and deteriorating due to sustained operating losses since establishment. Notwithstanding, AM Best expects that insurance regulatory oversight can partly mitigate potential undue influence from the parent on Berking Re’s capital and assets.

The rating downgrades also reflect the revised assessment on Berking Re’s operating performance to marginal from adequate, due to lack of clear visibility in the company’s latest financial performance, resulting from delays in business reporting. AM Best expects it will take a longer period of time for the company to achieve break-even results as it builds economies of scale to stabilise underwriting margins and improve cost efficiency.

The under review with negative implication status reflects AM Best’s view on the uncertainty regarding the capital position of Berking Re. As mentioned, the company continues to face delays in compiling financial information for written business. As a result, the audited financial statements for the financial year 2024 and the latest financial performance in 2025 are not yet available, adding to the uncertainties on the company’s capital position. Berking Re has disclosed that PFY Cayman is currently in the process of raising funds. In the event that PFY Cayman fails to execute its capital plan successfully, without alternative contingent capital support or revision of business plans, AM Best expects Berking Re’s risk-adjusted capitalisation to exhibit a deteriorating trend that may create negative pressure on its current balance sheet strength assessment.

The ratings will remain under review with negative implications pending more visibility into Berking Re’s up-to-date financial information, as well as the execution of PFY Cayman’s capital plans in the near future. AM Best also will continue to monitor the situation and provide updates as conditions warrant.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

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.

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