AM Best


NOVEMBER 10, 2022 10:13 AM (EST)

AM Best Affirms Credit Ratings of ERGO Insurance Pte. Ltd.


CONTACTS:
 Kanika Thukral
Senior Financial Analyst
+65 8907 0874
kanika.thukral@ambest.com

Myles Gould
Director, Analytics
+44 20 7397 0304
myles.gould@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Al Slavin
Communications Specialist
+1 908 439 2200, ext. 5098
al.slavin@ambest.com

FOR IMMEDIATE RELEASE

SINGAPORE - NOVEMBER 10, 2022 10:13 AM (EST)
AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of ERGO Insurance Pte. Ltd. (ERGO Insurance) (Singapore). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect ERGO Insurance’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 factor in rating enhancement from the company’s ultimate parent, Munich Reinsurance Company (Munich Re or the Munich Re group). ERGO Insurance is a wholly owned subsidiary of ERGO Group AG, which is the primary insurance arm of Munich Re.

ERGO Insurance’s balance sheet strength assessment of strong is underpinned by its risk-adjusted capitalisation, which was at the very strong level in 2021 and is expected to remain at least at this level over the near term, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite operating losses over a number of years having materially eroded the shareholders’ equity of the company, financial support from the Munich Re group has helped it maintain capital adequacy. However, the company’s small-sized absolute capital base is viewed to increase the sensitivity of capital adequacy to growth or performance outside of AM Best’s expectation, as well as to shock events. Other balance sheet considerations include the company’s conservative investment strategy and ongoing strong financial flexibility provided by the Munich Re group.

AM Best views the company’s operating performance as marginal. Although underwriting losses have contracted in recent years with the company having sought to reprice or non-renew underperforming business, the combined ratio has been pressured by a reduced business scale resulting in a high expense ratio. Whilst investment operations have contributed positively to overall earnings, technical results have led to pre-tax operating losses in each year since 2016. A program of remedial action continues to be implemented by the company’s management in conjunction with parent group support, with a target of returning the company to a position of technical and operating profitability over the medium to long term.

AM Best views ERGO Insurance’s business profile as limited. The company is a non-life insurer in Singapore, with a market share of approximately 1%, based on 2021 gross written premium. The company’s underwriting portfolio continues to exhibit line of business and geographical concentration.

The company receives rating enhancement from its ownership and integration with the Munich Re group. ERGO Insurance also benefits from implicit and explicit support from the Munich Re group, including recent and planned capital injections, as well as reinsurance protection.

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.


Related Companies

For information about each company, including the Best's Credit Reports, group members (where applicable) and news stories, click on the company name. An additional purchase may be required.

AMB# Company Name
086893 ERGO Group AG
091559 ERGO Insurance Pte. Ltd.
085011 Munich Reinsurance Company