HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Marble Reinsurance Corporation (Marble Re) (Micronesia). The outlook for both ratings is stable.
The ratings reflect Marble Re’s strong risk-adjusted capitalization and profitable operating performance. Marble Re’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), has remained strong due to its continuous and strong profitability.
Marble Re has reported strong profitability since commencing its captive operation in the Federated States of Micronesia (FSM), largely by leveraging its relationship with its parent group of companies, Marubeni Corporation (Marubeni) (Japan) and affiliates, and from favorable underwriting results within its major line, marine and cargo.
Offsetting factors include the relatively limited scope of business and small operations, and Marble Re’s parent company’s credit risk profile. As a single-parent captive of Marubeni, Marble Re has received a wide range of operational and management support, as well as capitalization. Therefore, Marble Re’s business is heavily influenced by Marubeni’s business developments and credit risk profile. Marble Re has increased its net retention in the non-marine line from fiscal year 2014, which could add pressure to risk-adjusted capitalization under big loss scenarios given the company’s relatively high level of net retention to capital and surplus.
Marble Re is well-positioned at its current rating level. Positive rating actions could occur if the company continues to report a strong profitability sufficient to support its risk-adjusted capitalization under stress test scenarios. Negative rating actions could occur if there is a material deterioration in the company’s capitalization due to significant operating losses or a strong increase in underwriting that is not followed by an adequate capital increase. Downward pressure could also arise from deterioration in Marubeni’s credit risk profile.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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