Cowen Re ratings still under review – what's keeping it down?

Uncertainty surrounds the business, credit agency says

Cowen Re ratings still under review – what's keeping it down?


By Kenneth Araullo

AM Best has maintained its under review with negative implications status for the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) for Cowen Reinsurance S.A. (Cowen Re), based in Luxembourg.

The ratings were first placed under review with negative implications on June 15, 2023, due to uncertainty surrounding Cowen Re’s future ownership. AM Best says that it does not expect Cowen Re to be part of The Toronto-Dominion Bank’s (TD Bank) long-term plans.

The negative implications also consider the negative trend in the company’s operating performance, which deteriorated in 2023, resulting in a pre-tax loss of $5.5 million, before movements in equalization reserves, as calculated by AM Best.

That said, the good ratings reflect Cowen Re’s balance sheet strength, which AM Best assesses as very strong, along with its adequate operating performance, limited business profile, and appropriate enterprise risk management.

The ratings will remain under review with negative implications until AM Best gains clarity regarding Cowen Re’s long-term ownership and business plans.

Back in 2022, Cowen Re announced a pre-tax deficit of $5.9 million (2021: $19.7 million gain). Since its inception in 2016, Cowen Re’s operational performance has been called inconsistent; the total pre-tax outcome since the company’s establishment is a $6 million loss (as determined by AM Best), with slight technical losses being partially counterbalanced by positive investment returns.

The assessment of Cowen Re’s business profile as limited also mirrors the company’s frail market standing in a vast and fiercely competitive global reinsurance market. In 2022, Cowen Re’s gross written premium totaled $24 million. The company underwrites non-life, short-tail business worldwide, concentrating on Europe and emerging markets.

After the company’s acquisition by TD Bank in March 2023, AM Best notes that there is ambiguity concerning Cowen Re’s future business strategy.

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