AM Best has downgraded the credit ratings of Berking Re Ltd, the Bermudian-based reinsurer, citing concerns about its financial strength and future performance.

The company's financial strength rating was lowered from B- (Fair) to C+ (Marginal), and its Long-Term Issuer Credit Rating dropped from “bb-” to “b-”, both now considered marginal. These ratings remain under review with negative implications.

AM Best said the downgrade reflects Berking Re’s “adequate” balance sheet strength but pointed to “marginal operating performance”, a limited business profile and weak risk management. The agency also raised concerns about Berking Re’s ability to raise new capital and meet its financial goals.

The downgrade is also tied to the performance of Berking Re’s parent company, PFY Health Technology Co Ltd, which is based in the Cayman Islands. AM Best said issues with the parent company’s business plans and capital strategy have put additional pressure on Berking Re’s standing.