NOVEMBER 12, 2020 10:13 AM (EST)
AM Best Affirms Credit Ratings of Evergreen Insurance Company Limited
FOR IMMEDIATE RELEASE
HONG KONG - NOVEMBER 12, 2020 10:13 AM (EST)
The ratings reflect EICL’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
EICL’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), remained at the strongest level, which is underpinned by low net underwriting leverage, a highly conservative investment portfolio and prudent reinsurance arrangements. The change in balance sheet strength assessment to very strong from strong reflects the company’s consistent trend in maintaining a robust level of BCAR with low volatility under standard and stress scenarios. The company’s capital and surplus has grown slightly over the past five years as the combined result of profit accumulation and dividend payouts. Going forward, AM Best expects the company to maintain an abundant buffer in its risk-adjusted capitalisation to support its risk profile.
EICL has demonstrated a track record of strong operating performance, mainly attributed to better-than-industry claims experience from group-related business, favourable reinsurance commission income and stable yet low investment yield. Equipped with strong underwriting knowledge and high visibility of group-related business trends, AM Best expects the marine business to be the key driver of EICL’s operating profit going forward.
As a pure captive of Evergreen Group, EICL’s underwriting book primarily consists of marine, aviation and property risks related to the group’s operations. In view of its high-severity low-frequency risk profile, the company utilises a comprehensive reinsurance programme arranged with a diversified panel of highly rated reinsurers and maintains a low premium retention rate. EICL continues to be an integral part of the group’s overall risk management by providing underwriting solutions, operational safety guidance and loss prevention services to affiliated companies.
Negative rating actions could occur if there are material capital or dividend payouts that lead to a substantial decline in EICL’s risk-adjusted capitalisation, or if there is a significant deterioration in the company’s operating performance that no longer supports the strong assessment. In addition, negative rating actions could occur if there is significant deterioration in the credit profile of its ultimate parent, Evergreen International S.A.
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.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.