KUALA LUMPUR, Nov 23 -- Global credit rating agency, AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of ‘bbb+’ of First Net Insurance Company (First Net) Guam.
The outlook of these Credit Ratings (ratings) is stable, according to a statement.
The ratings reflect First Net’s balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
First Net’s risk-adjusted capitalisation was at the strongest level in 2019, as measured by Best’s Capital Adequacy Ratio. The balance sheet strength assessment is also supported by the company’s zero-dividend policy (with the exception of 2017) and highly conservative investment portfolio.
Notwithstanding its small absolute capital base, First Net maintains a comprehensive and conservative reinsurance programme, placed under a high-quality reinsurer panel, to protect its capital against potential catastrophe losses.
First Net has reported a positive, yet relatively small level of operating income in each of the past five years (2015-2019). Its combined ratios mostly outperformed the composite average over the past 10 years, but the small net premium base led to moderate underwriting volatility and high expense ratios.
AM Best expects the company to face higher expense pressure given additional tax payment following the expiration of its domestic tax-exemption in April last year.
First Net is a domestic property and casualty (P/C) insurer on the island of Guam, with a market share of approximately four per cent based on 2018 direct premium written (excluding group accident and health).
For details, visit www.ambest.com.
-- BERNAMA
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