AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb” (Good) from “bbb+” (Good) and affirmed the Financial Strength Rating of B++ (Good) of Cowen Reinsurance S.A. (Cowen Re) (Luxembourg). In addition, AM Best has maintained the under review with negative implications status for these Credit Ratings (ratings).

These ratings reflect Cowen Re’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).

The Long-Term ICR downgrade reflects the poor track record of Cowen Re’s operating performance. Since its start of operations in 2016, Cowen Re has reported cumulative technical losses, which have been largely offset by investment gains. Cowen Re’s five-year weighted average combined ratio stood at 122.9% (as calculated by AM Best). Furthermore, during its ongoing sale process that started after its acquisition by Toronto-Dominion Bank (TD Bank) in March 2023, Cowen Re is only renewing existing programmes and is not underwriting any new business, putting the company under greater expense strain.

Cowen Re’s ratings were initially placed under review on June 15, 2023. This was due to the uncertainty regarding Cowen Re’s future ownership, given that AM Best does not expect the company to form a part of TD Bank’s long-term plans. Additionally, the negative implications status also reflects the uncertainty regarding the company’s strategic plans and the negative trend on the company’s business profile as Cowen Re is unable to underwrite new business. Although Cowen Re reported a pre-tax profit (before movements in equalisation reserves) of USD 9.95 million, mainly driven by investment income, technical performance remained under pressure, as reflected by a combined ratio of 118.4% at year-end 2024 (as calculated by AM Best).

The resolution of TD Bank’s plans for the company has taken longer than AM Best originally expected. The ratings will remain under review with negative implications until AM Best has gained certainty regarding the company’s long-term ownership and business plans.

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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