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BUSINESS

AM Best affirms Asian Reinsurance Corporation Credit Ratings

23/05/2022 11:21 AM

KUALA LUMPUR, May 23 (Bernama) -- Global credit rating agency, AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of ‘bbb-’ (Good) of Asian Reinsurance Corporation (Asian Re) Thailand.

According to a statement, the outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Asian Re’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).

Asian Re’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which AM Best expects to remain at the strongest level over the medium term. 

Asian Re is viewed to have moderate reliance on retrocession to support its underwriting of large limit risks, as well as to manage accumulation and catastrophe exposures.

A significant offsetting balance sheet strength factor is the company’s high risk investment strategy, with it holding a sizeable portion of cash and deposits in offshore countries, one of which is subject to sanctions and the other being currently in default of its sovereign debt.

AM Best views this investment strategy as creating increased liquidity and credit risk for Asian Re, as the imposition of existing and future sanctions or deepening of economic crisis in these respective countries may drive a heightened potential for transfer restrictions, which may impact the company’s ability to access its funds in a timely manner.

AM Best views the company’s operating performance as marginal. Asian Re’s operating performance has exhibited volatility in recent years, with a five-year average return-on-equity ratio of -0.1 per cent and a combined ratio of 123.6 per cent (2017-2021), as calculated by AM Best. 

In addition, AM Best views Asian Re’s business profile as limited, given the company’s position as a regional non-life reinsurer, with a modest-sized gross premium base of US$23.5 million in 2021. (US$1 = RM4.387)

AM Best considers Asian Re’s ERM approach to be appropriate given the size and complexity of its current operations. The company continues to develop its risk framework and has demonstrated improvements in its risk management capabilities over recent years.

More details at www.ambest.com.

-- BERNAMA


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