SINGAPORE--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of National Reinsurance Corporation of the Philippines (NRCP) (Philippines). The outlook of these Credit Ratings (ratings) is negative.
The ratings reflect NRCP’s balance sheet strength, which A.M. Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
NRCP’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supported by its low underwriting leverage. The geographic diversification of the company’s underwriting book also has increased in recent years.
In terms of operating performance, NRCP’s combined ratio has declined steadily since 2013 following a series of portfolio remediation exercises. The composition of the underwriting book also has changed, with less emphasis on fire lines and more on life reinsurance.
An offsetting rating factor is the potential volatility in NRCP’s underwriting performance. Although there has been a gradual improvement in overall underwriting results, the company’s underwriting margin remains thin. In addition, its fast-expanding overseas portfolio has yet to be profitable. Certain lines of business also continue to show poor performance.
A stable outlook could be assigned if the company improves its underwriting profitability and demonstrates stability in its underwriting results. Negative rating actions could occur if there is material deterioration in NRCP’s operating performance or risk-adjusted capitalization.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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