KUALA LUMPUR, Oct 26 (Bernama) -- Global credit rating agency, AM Best has affirmed Malaysia’s Labuan Reinsurance (L) Ltd (Labuan Re) Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent).
The credit ratings (ratings), which have a stable outlook, reflected Labuan Re’s balance sheet strength, which AM Best assessed as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
In a statement, AM Best said the company’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, which is at the strongest level at year-end 2022.
Labuan Re adopts a prudent capital management approach to support risk-adjusted capitalisation at the strongest level over the medium term, along with an appropriate regulatory solvency position.
The rating agency views the company as having a moderate risk investment strategy with investment assets predominantly held in cash, deposits and high quality fixed-income instruments, albeit with a modest exposure to equities.
Labuan Re’s operating performance was viewed as adequate, with its overall earnings historically supported by robust investment returns, and it has recorded an elevated average combined ratio of 105.6 per cent over a five-year period between 2018 and 2022, primarily due to catastrophe-related losses.
However, following remedial actions taken by management, the company’s underwriting performance improved in 2021 and 2022.
Prospectively, AM Best expects an adequate level of operating performance to be maintained and underpinned by positive underwriting results and investment income, despite short-term volatility driven by unrealised fair value investment losses in recent periods.
The rating agency assesses Labuan Re’s business profile as neutral given its position as a well-established regional non-life reinsurer and its business profile continues to benefit from portfolio diversification via its participation as a corporate member in Lloyd’s syndicates.
-- BERNAMA
No comments:
Post a Comment