JUNE 16, 2022 10:41 AM (EDT)
AM Best Affirms Credit Ratings of DTRIC Insurance Company, Limited and DTRIC Insurance Underwriters, Limited
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Associate Director, Analytics
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FOR IMMEDIATE RELEASE
HONG KONG - JUNE 16, 2022 10:41 AM (EDT)
AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” (Excellent) of DTRIC Insurance Company, Limited (DTRIC), and its reinsured affiliate, DTRIC Insurance Underwriters, Limited. The outlook of these Credit Ratings (ratings) is stable. Both companies are domiciled in Honolulu, HI.
The ratings reflect DTRIC’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management. The ratings also consider the impact of implicit and explicit support given to DTRIC by Aioi Nissay Dowa Insurance Company Limited (ADI), a member of MS&AD Insurance Group Holdings, Inc. ADI has an FSR of A+ (Superior) and is classified under the Financial Size Category of XV ($2 billion or greater).
AM Best’s assessment of DTRIC’s balance sheet strength as strong is well supported by its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). While this assessment also reflects the company’s strong liquidity, moderately conservative investment strategy, and good quality reinsurance panel, the company’s moderate dependence on reinsurance and its net exposure to potential losses from natural catastrophes continue to be the key offsetting factors to the assessment.
In terms of operating performance, the company recorded an underwriting loss of USD 1.1 million in fiscal year 2021. DTRIC’s written premium also remained under pressure in fiscal year 2021 due to the loss of some commercial accounts and the slower than expected economic recovery in Hawaii. Nevertheless, DTRIC continued to generate positive net income, supported by the company’s consistently positive and stable investment income. The company is implementing an IT system upgrade, which AM Best expects to weigh on its underwriting expenses and performance over the next few years.
DTRIC mainly specialises in underwriting personal automobile insurance, workers’ compensation and a number of other commercial line products in Hawaii, where the company holds an overall market share of approximately 2%. Although there is no significant concentration in its product mix, its narrow geographic focus is a major factor that has constrained DTRIC’s business profile assessment.
The stable outlooks reflect AM Best’s expectation that DTRIC will maintain its overall balance sheet strength assessment, supported by risk-adjusted capitalisation at least at a strong level, as measured by BCAR. AM Best also expects that ongoing strategic initiatives implemented by management are likely to maintain positive momentum of its operating performance over the short to medium term.
Negative rating actions could occur if there is material deterioration in DTRIC’s risk-adjusted capitalisation caused by large-scale natural catastrophes or if its profitability falls below AM Best’s expectations due to competitive pressure, adverse claims experience or over-run expenses. Negative rating actions could also occur if there is significant reduction of support from ADI or significant deterioration in ADI’s credit profile, including its risk-adjusted capitalisation, financial leverage or interest coverage levels.
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.