SINGAPORE--(BUSINESS WIRE)--A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of ECICS Limited (ECICS) (Singapore).
The revised outlook reflects the decline in the company’s operating performance due to weakened demand and competition in ECICS’ core business. Since inception, ECICS has focused on construction bond and trade credit insurance, which are small and cyclical segments of the market.
Although ECICS is taking remedial actions by diversifying into general insurance segment, the company is likely to face high implementation risks, which could result in prolonged expense strain and reduced profitability.
Partially offsetting these negative rating factors are the company’s favorable risk-adjusted capitalization, and strategies implemented to reduce volatility to capital from large bond claims. This includes new reinsurance arrangements whereby ECICS’ net retention on new and inforce business will be substantially reduced. Combined with expected premium growth, this should help to reduce claims volatility over time.
The outlook could be revised back to stable if the company restores balanced and profitable results while achieving its planned premium growth.
Negative rating action could occur if ECICS fails to meet its business plan.
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