AM Best Assigns Credit Ratings to GUNA Re

HONG KONG--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to GUNA Re (Cayman Islands). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect GUNA Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

GUNA Re was established in February 2026 in the Cayman Islands as a new single-parent captive for ITOCHU Corporation (ITOCHU) with a plan for all existing businesses to be novated from NEWGT Reinsurance Company, Ltd., which is the existing captive insurer of ITOCHU in Bermuda. The re-domiciliation is being undertaken to support the expansion of third-party business. ITOCHU is one of the largest general trading companies in Japan.

GUNA Re’s balance sheet strength assessment reflects the strongest level of projected risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which is based on the company’s business plan. Although GUNA Re’s underwriting risks stemming from anticipated business expansion are likely to remain a predominantly capital consumption factor, AM Best notes that management intends to carefully monitor and control the pace of business expansion with appropriate capital management to maintain the company’s current level of risk-adjusted capitalisation. The assessment is further supported by GUNA Re’s projected conservative investment strategies and low dependence on retrocession.

GUNA Re’s adequate operating performance assessment reflects the expectation that it will achieve overall profitable results based on its business plan, which projects low double-digit return-on-equity (ROE) and favourable combined ratios for the next five years. The company anticipates moderate growth in gross written premium and underwriting profits over the next five years. While the operating performance will be mainly supported by the expansion of third-party business, the ITOCHU-related captive business will remain a steady contributor.

Although the third-party business expansion may lead to some erosion of underwriting control for GUNA Re compared to its group-related captive business, AM Best notes that the expansion includes growth of businesses sourced through the parent’s global relationships and affiliated channels, which could partially mitigate the potential risk. Overall, GUNA Re’s core business objective as a captive insurer and its several competitive advantages including strict governance of the group, and cautious and selective underwriting management remain the same.

Negative rating actions could occur if GUNA Re’s aggressive expansion into third-party business leads to a deterioration in its business profile, driven by stronger competition and reduced underwriting control inherent to a traditional single-parent captive business model. Negative rating actions also could arise if there is a material decline in its risk-adjusted capitalisation such as from heightened underwriting risk due to an aggressive business expansion or an excessive dividend payout to its ultimate parent. Additionally, negative rating actions could occur if there is significant deterioration in ITOCHU’s credit profile.

Although unlikely in the near term, positive rating actions could occur if GUNA Re demonstrates sustainable improvement in its underwriting and operating profitability for a period of time, while maintaining a robust level of risk-adjusted capitalisation.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

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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