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Best’s News & Research Service - October 27, 2022 09:37 AM (EDT)

AM Best Affirms Credit Ratings of NEWGT Reinsurance Company, Ltd.

  • October 27, 2022 09:37 AM (EDT)
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Hong Kong //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of NEWGT Reinsurance Company, Ltd. (NEWGT) (Bermuda). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect NEWGT’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The balance sheet strength is well-supported by NEWGT’s risk-adjusted capitalisation, which is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s balance sheet strength also is underpinned by its favourable balance sheet liquidity and healthy capital structure. Although the company has moderate reliance on reinsurance, this risk is mitigated by its high quality and well-diversified reinsurance panel.

NEWGT’s operating performance has been consistently stable and profitable with a five-year average net loss ratio and net combined ratio of 65% and 91% (2017-2021), respectively. For the fiscal year ended 31 March 2022, NEWGT’s underwriting profit from its general account improved to JPY 226 million from JPY 45 million as a result of business recovery from the COVID-19 pandemic and higher commodity prices. NEWGT continued to report low but stable investment returns with its conservative investment strategy. Prospectively, AM Best expects the company’s overall operating performance will remain profitable with its premium income to continue to benefit from the recovery of its parent company’s trading business and its combined ratio to remain stable.

NEWGT is a wholly owned subsidiary of Itochu Corporation (Itochu), one of Japan’s largest general trading companies listed on the Tokyo Stock Exchange. As a single-parent captive of Itochu, Itochu-related marine business continues to form a large majority of NEWGT’s business in terms of net premium written. In addition, the company has been diversifying its portfolio through underwriting some third-party and non-marine risks through its segregated account, which consists of well-diversified and less volatile lines such as theft insurance, renters’ insurance and group personal accident.

Negative rating actions could occur if there are substantial underwriting losses caused by a material shift in its risk appetite. Negative rating actions also could arise if there is significant deterioration in Itochu’s credit profile, including its operating profitability, financial leverage and interest coverage levels.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit .

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.

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