SINGAPORE--(BUSINESS WIRE)--A.M. Best has downgraded the Financial Strength Rating (FSR) to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “bbb+” from “a-” of ERGO Insurance Pte. Ltd. (ERGO Insurance) (Singapore). The outlook of the Long-Term ICR has been revised to negative from stable, while the FSR outlook remains stable.
The ratings reflect ERGO Insurance’s balance sheet strength, which A.M. Best categorizes as strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management.
The downgrade reflects a material decline in capital below projections provided to A.M. Best in January 2018 due to weaker than expected performance. As a result of its reduced capital size, the company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), could experience greater volatility from unexpected events.
The Long-Term ICR outlook revision to negative reflects A.M. Best’s concern with the execution risk related to the ERGO Group AG’s plan to reposition ERGO Insurance in Singapore.
The Long-Term ICR outlook could be revised to stable if the company demonstrates a trend of positive results. Negative rating actions may arise from further deterioration in the company’s capital due to weak operating performance. A reassessment of ERGO Insurance’ strategic role as a wholly owned subsidiary of the Munich Reinsurance Company could also result in negative rating actions.
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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