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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 issuer credit rating of “a-” of SHC Insurance Pte. Ltd. (SHC Insurance) (Singapore). The outlook for both ratings is stable.
The ratings reflect SHC Insurance’s adequate risk-based capitalization, favorable operating performance since 2009 and sound risk management practice.
SHC Insurance has registered healthy growth in its capital and surplus in the past five years. The company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supportive of its current ratings and is expected to remain adequate to support the company’s business growth in the near term.
The current management of SHC Insurance, which was formed in 2007/2008, has implemented various initiatives to improve the company’s underwriting performance. Due to management’s efforts, SHC Insurance has reported noticeable improvements in its operating profitability while registering strong top line growth. Gross premiums in 2011 were 2.7 times the premiums written in 2007. SHC Insurance’s overall combined ratio has been maintained between 84% and 88% since 2009. In addition, SHC Insurance’s conservative investment portfolio continues to generate stable income.
Offsetting rating factors include the potential pressure on SHC Insurance’s risk-adjusted capitalization level from future dividend payout and its possible future acquisition and business expansion activities. Another offsetting factor is the challenges the company faces to further enhance its profile in the competitive Singapore non-life insurance market.
Negative rating actions could occur if there is deterioration in SHC Insurance’s underwriting performance or significant erosion in its capitalization level.
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: “Understanding Universal BCAR”; “Catastrophe Analysis in A.M. Best Ratings”; “Evaluating Country Risk”; and “Risk Management and the Rating Process for Insurance Companies.” 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.