The ratings reflect MIC’s sound risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and stable underwriting performance for fiscal-year 2016. MIC continues to maintain a strong balance sheet, driven by a conservative level of net premium leverage, sound liquidity, a prudent investment strategy and a comprehensive reinsurance program.
Offsetting rating factors include MIC’s underwriting profit margin being low in certain lines of business such as motor and employee compensation in a market with increased competition and higher claims inflation. In addition, volatility in revaluations of MIC’s investment properties also has negatively impacted the company’s overall investment performance in the past two years.
Positive rating actions could occur if MIC demonstrates consistent and sustained improvement in its business profile and underwriting performance, coupled with a strong level of risk-adjusted capitalization. Negative rating actions could occur if MIC’s operating performance deteriorates, leading to a decline in its risk-adjusted capitalization level.
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