Best’s News & Research Service - September 28, 2017 01:01 PM (EDT)
A.M. Best Revises Outlooks to Positive for Capital General Insurance Company Limited
- September 28, 2017 01:01 PM (EDT)
Singapore //BestWire// - A.M. Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating (FSR) of B- (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bb-” of Capital General Insurance Company Limited (CGI). Concurrently, A.M. Best has affirmed the FSR of B- (Fair) and the Long-Term ICR of “bb-” of Capital Life Insurance Company Limited (CLI). The outlook of these Credit Ratings (ratings) is positive. Both companies are subsidiaries of the Capital Insurance Group Limited and domiciled in Papua New Guinea.
The ratings reflect CGI’s and CLI’s supportive risk-adjusted capitalization and strong operating performance. Additionally, the ratings consider CGI’s and CLI’s rapid expansion in their domestic market through the successful implementation of growth strategies.
The outlook revisions for CGI recognize its improved risk-adjusted capitalization following a period of strong growth and earnings generation. Over the past five years, the company’s average operating ratio was approximately 70%, while its average return on equity exceeded 30%.
A partially offsetting rating factor is concern over CGI’s relatively large policy limits in its property lines of business, which are subject to catastrophe event risks.
The rating affirmations of CLI reflect its strong risk-adjusted capitalization and continued positive operating performance. Over the past five years, the company’s average return on net premiums was approximately 14%, and its average return on equity was close to 20%.
Partially offsetting this positive rating factor is CLI’s deteriorating claims experience, particularly in regard to its group medical policies and uncertainties surrounding its newly developed micro-insurance book.
The ratings also incorporate A.M. Best’s view that CGI and CLI have weak and relatively underdeveloped enterprise risk management programs.
Upward rating movement could occur if the companies meet their projected operating performance and maintain supportive risk-adjusted capitalization. The ratings could be impacted negatively by any significant deterioration in the companies’ risk-adjusted capitalization or operating performance.
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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