SINGAPORE--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of Asia Capital Reinsurance Group Pte. Ltd. (Asia Capital Re) (Singapore) and its subsidiary, Asia Capital Reinsurance Malaysia Sdn Bhd (ACRM) (Malaysia). A.M. Best also has affirmed the Long-Term ICR of “bbb-” of the holding company, ACR Capital Holdings Pte. Ltd. (ACR Holdings) (Singapore). The outlook of these Credit Ratings (ratings) is negative.
The ratings of Asia Capital Re reflect its balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Asia Capital Re’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains solid and is supported by low underwriting leverage and good asset quality.
The ratings of ACRM reflect its balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM. The ratings also reflect the support it receives from its parent, Asia Capital Re.
ACRM’s balance sheet strength remains supported by significant retrocession support from its parent.
Both companies also share certain services and infrastructure.
The negative outlooks reflect Asia Capital Re’s record of varying and unprofitable underwriting performance. Although narrowed, Asia Capital Re registered a marginal underwriting loss in 2017. Unaudited interim results as of May 2018 showed an underwriting profit, as remedial actions to improve underwriting margins are implemented. Nonetheless, A.M. Best remains concerned about execution risk related to its initiatives to improve its technical results by rebalancing its underwriting portfolio amid soft market conditions. Regarding ACRM, concerns remain over its business profile.
ACR Holdings’ Long-Term ICR reflects the standard notching from Asia Capital Re, its primary operating entity.
Further negative actions regarding Asia Capital Re could arise from deterioration in its operating performance. A revision to a stable outlook could occur if Asia Capital Re achieves sustained underwriting profitability while meeting its planned premium targets.
Further negative actions regarding ACRM could arise if the support provided by Asia Capital Re diminishes.
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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