KUALA LUMPUR, Feb 24 (Bernama) -- United States-headquartered AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Shanghai Electric Insurance Limited (SEIL), Hong Kong.
AM Best in a statement said the Credit Ratings (ratings), which have a stable outlook, reflected SEIL’s balance sheet strength, which AM Best assessed as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The global credit rating agency assessed SEIL’s balance sheet strength at the very strong level, supported by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR).
According to unaudited financials as of 2022-end, although the company’s capital and surplus decreased during the year due to a net loss and decline in investment revaluation reserves, its BCAR remained at a robust level.
AM Best expects the captive to maintain a sufficient buffer in its risk-adjusted capitalisation, supported by a low net underwriting leverage, appropriate reinsurance arrangements and prudent risk selection.
The company experienced continued headwinds on investments in 2022. Its investment loss was attributable primarily to realised losses from shares investment and was offset partially by interest and dividend income.
SEIL took the initiative to de-risk its equity investments and reallocate to fixed income securities and cash only by the end of 2022. The captive expects its investment return to stabilise and bottom line to revert in 2023.
AM Best viewed that the company has been prudent on asset allocation strategy and maintained a sufficient capital buffer to withstand potential investment loss.
In view of its low-frequency, high-severity risk profile, the captive has arranged a reinsurance programme to protect its capital and AM Best expects the captive to maintain a sufficient buffer in its risk-adjusted capitalisation to support its risk profile over the next three years.
-- BERNAMA
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