SINGAPORE--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of MS First Capital Insurance Limited (MSFC) (Singapore). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect MSFC’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains solid. Capital and surplus has increased steadily through growth in retained earnings while underwriting leverage remains low. MSFC’s investment portfolio also has become more conservative through a reallocation of its equity exposure to fixed income.
In terms of underwriting performance, the company has performed well compared with its peers, benefiting from favorable reinsurance profit commission income. Its combined ratio has averaged below 80% for the past five years, while return on equity has averaged above 10%. MSFC also has been adept at seeking opportunities abroad where it generates approximately half of its gross premiums, providing some geographic diversification.
An offsetting rating factor is the continued price erosion in certain business lines. The company responded by reducing premiums but has so far been able to keep its underwriting margins at a strong level. Additionally, while MSFC continues to benefit from the strengths of its key management team, institutionalizing these strengths could enhance the company’s growth potential in the long run.
Positive rating actions are unlikely in the near term. Negative rating actions could result from a weakening of the company’s business profile or operating performance.
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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