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FOR IMMEDIATE RELEASE
HONG KONG - DECEMBER 20, 2012 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and the issuer credit ratings (ICR) of “a-” of Asia Capital Reinsurance Group Pte. Ltd. (ACR) (Singapore), Asia Capital Reinsurance Malaysia Sdn Bhd (ACRM), ACR ReTakaful Berhad (both domiciled in Malaysia) and ACR ReTakaful MEA B.S.C. (c) (ACR ReTakaful MEA) (Bahrain). A.M. Best also has affirmed the ICR of “bbb-” of ACR Capital Holdings Pte. Ltd. (ACR Holdings) (Singapore) and ACR ReTakaful Holdings Limited (United Arab Emirates). The outlook for all ratings is stable.
The ratings reflect ACR, ACRM, ACR ReTakaful Berhad and ACR ReTakaful MEA’s adequate capitalization and enhanced enterprise risk management. A.M. Best also acknowledges the companies' disciplined and prudent investment strategies.
During the early part of 2012, the capitalization of ACR, ACRM, ACR ReTakaful Berhad and ACR ReTakaful MEA was weakened, largely due to unfavorable underwriting performance as a result of the catastrophe losses that occurred in the Asia-Pacific region in 2011. For the fiscal year ending March 31, 2012, ACR had a net incurred loss ratio of 107%. The net incurred loss ratios for ACRM, ACR ReTakaful Berhad and ACR ReTakaful MEA's for fiscal year ending December 31, 2011 were 123%, 142% and 152%, respectively. Nonetheless, the companies took measures to restore their capital strength, including a capital injection, reducing net retention of underwriting risks and reducing catastrophe exposures. The risk-adjusted capitalization of ACR, ACRM, ACR ReTakaful SEA and ACR ReTakaful MEA has been restored to an adequate level and is supportive of their current ratings.
The enhanced enterprise risk management framework also safeguards the companies’ capitalization going forward.
Offsetting these positive rating factors are the companies’ volatile historical underwriting results and the competitive reinsurance market in the Asia-Pacific region.
Future positive rating actions could occur if the companies further improve their risk-based capitalization and demonstrate the ability to achieve consistently favorable operating performance. Conversely, negative rating actions could occur if the companies’ operating performance materially deviates from their projections, or their risk-adjusted capitalization declines to a level below A.M. Best’s expectations.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Catastrophe Analysis in A.M. Best Ratings”; “Evaluating Country Risk”; “Rating Members of Insurance Groups”; “Risk Management and the Rating Process for Insurance Companies”; “Takaful (Shari'a Compliant) Insurance Companies”; and “Understanding Universal BCAR.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.