HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Peak Reinsurance Company Limited (Peak Re) (Hong Kong). The outlook for both ratings is stable.
The ratings of Peak Re reflect its supportive risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and the experience of its senior management in the reinsurance industry. The ratings also recognize the company’s improved diversification by region and lines of business, development of in-house risk management functions, as well as the improving trend in the management expense ratio.
Partially offsetting rating factors include the potential volatility in Peak Re’s investment results, the competitive global reinsurance market in which the company operates and a weaker underwriting result than projected in its initial business plan when the ratings were first assigned in 2012. As the company strategically sets a high proportion of investments in higher risk assets, volatility in asset values or negative market sentiment could adversely impact operating performance. Also, strong premium growth anticipated over the next three years will lead to an increase in the underwriting leverage ratio and place pressure on risk-adjusted capitalization.
Positive rating movement could occur if the company can demonstrate strong risk-adjusted capitalization and a stable track record of underwriting and investment profitability over a period of years. Negative rating actions may occur if the company’s risk-adjusted capitalization, liquidity position or level of financial flexibility declines to a level below A.M. Best’s expectations or a deteriorating trend in underwriting or investment results emerges.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
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