AM Best removes Gulf Re from negative watch

Rating agency AM Best has removed Gulf Reinsurance from negative watch, following Arch’s acquisition of the reinsurer.

The rating agency affirmed Gulf Re’s financial strength rating of A- (Excellent) and the issuer credit rating of a-.

The action reflects the enhanced support Gulf Re has received from co-founder Arch following its acquisition.

“Arch’s commitment to Gulf Re extends further through the implementation of a 90 percent quota share arrangement and loss portfolio transfer between the two companies, risk management services, underwriting guidance and strategic reviews of its operations,” said the rating agency.

It added that positive rating pressure could arise from profitable underwriting performance measured on a gross and net basis, along with an improvement in the company’s market franchise.

However, negative pressure could arise from a revision in the level of support provided by Arch.