Best’s News & Research Service - November 30, 2017 08:42 AM (EST)
A.M. Best Affirms Credit Ratings of First Net Insurance Company
- November 30, 2017 08:42 AM (EST)
Hong Kong //BestWire// - A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” of First Net Insurance Company (First Net) (Guam). The outlook of these Credit Ratings (ratings) is stable.
The rating affirmations reflect First Net’s balance sheet strength, which is categorized as strong by A.M. Best, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The affirmations also consider First Net’s stable business distribution through its affiliate, Moylan’s Insurance Underwriters, Inc. (MIU).
The company maintains solid risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). However, because it is located in a catastrophe-prone area, the company is subject to earnings and capital fluctuations from its inherent exposure to severe catastrophe events. The company mitigates these risks through a conservative catastrophe reinsurance strategy.
Offsetting rating factors include potential volatility in underwriting results due to large events, a high dependency on reinsurance that results in high reinsurance costs, and a limited business profile regarding future growth.
Positive rating actions could occur if First Net continues to demonstrate favorable and stable operating results, while maintaining its solid risk-adjusted capitalization.
Negative rating actions could occur if there is significant deterioration in the company’s operating performance, or if there are material capital or dividend payouts that lead to a substantial decline in its risk-adjusted capitalization.
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 A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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