SINGAPORE--(BUSINESS WIRE)--AM 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 AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The ratings also factor in a neutral impact from the company’s ultimate majority ownership by MS&AD Insurance Group Holdings, Inc. (MS&AD group).
MSFC’s balance sheet strength assessment is underpinned by risk-adjusted capitalization that remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Capital adequacy is supported by the company’s low underwriting leverage and conservative investment approach. Full retention of earnings over the past five years has resulted in shareholders’ equity growing notably to SGD 829 million (USD 607 million) in 2018 from SGD 412 million in 2013. Other balance sheet considerations include the company’s moderate dependence on reinsurance to manage its exposure to catastrophe events, accumulations and large single property risks.
AM Best views MSFC’s operating performance as strong. The company has a track record of consistent and favorable underwriting and operating profitability, with a five-year average combined ratio of 72% and return on equity ratio of 13% (2014-2018). Underwriting results have been supported by the strong performance of property and marine classes of business, which over a number of years, have benefited from typically low net loss experience and favorable reinsurance commission income. Overall earnings also continue to benefit from stable investment income, arising largely from interest on the company’s cash and term deposit holdings.
MSFC’s business profile is assessed as neutral. The company has a strong presence in Singapore’s non-life market, as well as in selected overseas markets, with total gross written premium of SGD 480 million in 2018. The company continues to exhibit strong and long-standing relationships with clients and brokers. Despite this, AM Best expects persistent competitive market conditions in the company’s domestic market, as well as in some overseas markets in which MSFC generates a sizeable component of its business, to hamper near-term growth prospects.
AM Best considers the company’s approach to risk management to be appropriate given the size and complexity of its current operations. MSFC also benefits from a level of risk management oversight and governance from the MS&AD group.
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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