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A.M. Best Affirms Credit Ratings of Austral Resseguradora S.A. and Austral Seguradora S.A.

A.M.Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-TermIssuer Credit Ratings of "bbb+" of Austral Resseguradora S.A. (Austral Re) and (AustralSeg). The outlook of these Credit Ratings (ratings) is stable. Both companiesare domiciled in Brazil.

Theratings reflect the sound risk-adjusted capitalization of Austral Re andAustral Seg (collectively Austral) and their solid operating history ofpositive overall earnings. Austral Re is registered as a "local"reinsurer in Brazil, which positions the company for greater accessibility tobusiness when compared to reinsurers licensed in the country as "admitted"or "occasional". Austral Re's operations focus on high growth areas,such as life, health, surety, engineering and crop risks, while Austral Seg mainlywrites surety, oil and gas, and auto risks. Additionally, Austral has adopted awide-ranging risk management program and maintains a solid retrocessionalstrategy to safeguard capital and mitigate downside risk. Thus far, the grouphas begun to build a favorable business profile as an agile player able toprovide a range of (re)insurance solutions.

Partiallyoffsetting these positive rating factors is Brazil's highly competitive(re)insurance market as both home-grown and global (re)insurers continue toenter the market. In addition to difficult market conditions, Austral must alsocontend with significant macroeconomic and political challenges in Brazil overthe short and medium term. The group's reinsurance program is generally placedwith highly rated counterparties as it remains dependent on reinsurance toprovide additional market capacity.