AM BEST AFFIRMS CREDIT RATINGS OF GUAM’S FIRST NET INSURANCE

KUALA LUMPUR, Nov 21 (Bernama) -- Global credit rating agency AM Best has affirmed the financial strength rating of B++ (Good) and the long-term issuer credit rating of bbb+ (Good) of Guam’s First Net Insurance Company (First Net).

The credit ratings, which have a stable outlook, reflect the domestic property/casualty insurer’s balance sheet strength -- which AM Best has assessed as strong -- as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

In a statement, AM Best said First Net’s risk-adjusted capitalisation is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio, and supported by its relatively low net underwriting leverage and conservative and liquid investment portfolio, both of which partially offset its small absolute capital base.

The rating agency said First Net’s reinsurance dependency is relatively high for catastrophe protection, and it has risen in recent years due to an increase in fronting-type business.

“However, credit risk is limited by its stable and high-quality reinsurer panel,” it added.

AM Best said First Net’s adequate operating performance is underpinned by positive underwriting results and stable investment returns from its fixed-income portfolio.

“Its combined ratios mostly outperformed its composite’s average over the past years, supported by disciplined underwriting, but the company’s small net premium base has led to moderate volatility arising from claims experience and expenses,” it said.

In addition, AM Best said, the company’s underwriting performance was favourable in 2020/2021 mainly due to reduced claims in key business lines as economic activities decreased during the COVID-19 pandemic.

First Net’s main lines of business include fire, auto and workers’ compensation.

-- BERNAMA