Berking Re sits with a stable outlook, pressure from market volatility seen: AM Best

The insurer’s governance and regulatory oversight are expected to adequately protect its capital and assets.

Despite being a newcomer in the industry,  AM Best has assigned Berking Re with a stable outlook due to its promising balance sheet, adequate operating performance, limited business profile, and appropriate enterprise risk management (ERM).

Established in Bermuda in February 2022 and licensed in January 2023, Berking Re is fully owned by PFY Health Technology. Initially capitalised at $3.0m, the company's capital and surplus increased to $4.3m by October 2023.

Berking Re's risk-adjusted capitalization is expected to remain robust over its first five-year business plan (2024-2028), despite a projected moderate decline due to underwriting portfolio expansion. 

However, the company’s small capital base makes it vulnerable to volatility and dependent on timely capital support from PFY Group.

As a new reinsurance company, Berking Re anticipates a net loss in its first year, turning profitable in the second year with growing premiums and stable investment returns.

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The company faces high operational and business execution risks, mitigated by prudent underwriting and support from PFY Group.

Berking Re focuses on health reinsurance in China, including medical, pharmacy, personal accident, and liability insurance. 

Its initial small premium scale and product concentration present moderate risk. The company plans to grow by leveraging PFY Health Technology’s (Shanghai) insurance client network.

Currently developing its ERM framework, Berking Re's governance and regulatory oversight are expected to adequately protect its capital and assets. However, the company is at risk if PFY Group faces financial or external challenges.

Negative rating actions could follow significant deviations from Berking Re’s business plan, deterioration in capitalisation, or adverse developments in PFY Group. Conversely, positive ratings could arise from enhanced balance sheet strength aligned with expansion plans.