S&P Global Ratings withdrew the "brAA+" Brazil national scale rating of Terra Brasis Resseguros SA after the completion of its merger with Austral Resseguradora SA.

In April, both companies announced negotiations for a possible merger, in a bid to form Brazil's third-largest reinsurer.

The rating agency pointed to Terra Brasis Resseguros's weaker operating performance than that of the largest Brazilian reinsurers, despite the improvement in its results in recent years.

"Despite maintaining comfortable levels of risk-adjusted capital, we understand that Terra Brasis was exposed to the volatility of the reinsurance industry, which could bring some instability to its bottom line and its small capital base in absolute terms," S&P Global Ratings added.

Regarding the merger completion between the insurers, the rating agency said it expects positive results for Austral Resseguradora since it will benefit in terms of scale, costs and regional diversification.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.