AM BEST REVISES OUTLOOKS, AFFIRMS CREDIT RATINGS OF PEAK RE

KUALA LUMPUR, Oct 17 (Bernama) -- Global credit rating agency, AM Best has revised its outlook for Peak Reinsurance Co Ltd (Peak Re), Hong Kong and its subsidiary, Peak Reinsurance AG, Switzerland to negative from stable and affirmed the Financial Strength rating of A- (Excellent) and the Long-Term Issuer credit rating of “a-” (Excellent).

The revised ratings reflect Peak Re’s strong balance sheet, adequate operating performance, neutral business profile and appropriate enterprise risk management.

In addition, the rating factor in a neutral impact from the company’s parent, Fosun International Holdings Ltd (Fosun).

According to a statement today, the negative outlooks reflect AM Best’s expectation that macroeconomic headwinds and current unfavourable capital and investment market conditions may induce financial stress on Fosun over the short to intermediate term.

However, AM Best notes that Peak Re has demonstrated a track record of effective mitigation of potential contagion risk stemming from Fosun’s weaker credit fundamentals, and the company can maintain its own financial strength.

Peak Re’s standalone business fundamental remains stable as the company’s risk-adjusted capitalisation -- measured by Best’s Capital Adequacy Ratio -- is projected to remain at the strongest level over the short to intermediate term.

The company’s capital and surplus have achieved a compounded average growth rate of 11.8 per cent during the five-year period from 2017 to 2021, mainly due to the issuance of perpetual subordinated guaranteed capital securities in 2020, a capital injection from shareholders in 2018 and the full retention of earnings.

Additionally, it has consistently reported favourable operating results, with an average return on equity of 4.4 per cent during the same period, supporting a strong interest coverage.

Peak Re’s non-life portfolio is diversified both by product lines and geography, with a focus on the Asia-Pacific region.

The company aims to selectively expand its United States casualty business, continue growing its non-proportional treaty business, and expand in traditional risk business in the life segment.

-- BERNAMA