SINGAPORE--(BUSINESS WIRE)--A.M. Best has assigned a financial strength rating of B++ (Good) and an issuer credit rating of “bbb+” to EQ Insurance Company Limited (EQ) (Singapore). The outlook assigned to both ratings is stable.
Established in 2007, EQ is a general insurer based in Singapore and a wholly owned subsidiary of Citystate Capital Asia Pte. Ltd. (CCA). EQ is a small participant in terms of market share in the Singapore’s general insurance business.
The assigned ratings consider EQ’s adequate risk-adjusted capitalization, prudent investment portfolio and low underwriting leverage.
EQ’s consistent returns from an investment portfolio comprised mainly of cash holdings has helped to sustain the company’s overall profitability. Additionally, successive capital injection received from its parent company in excess of dividends paid has kept both gross and net underwriting leverage low.
Offsetting rating factors include a limited business profile. As a small participant in a mature market, EQ faces challenges in growing profitably. EQ’s underwriting performance has trailed the general insurance average in Singapore primarily due to a higher than average claims ratio.
Positive rating momentum could result from achieving balanced and improved profitability while reaching projected top-line growth. Negative rating pressure could arise from a deterioration in operating performance due to expansion or a deterioration in its parents’ financial condition.
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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