A.M. Best Assigns Ratings to Asia Capital Reinsurance Malaysia Sdn Bhd
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OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of "a-" to Asia Capital Reinsurance Malaysia Sdn Bhd (ACRM) (Malaysia). The outlook assigned to both ratings is stable.
The ratings reflect ACRM's solid capitalization, prudent reserving practice and strong risk management capabilities.
The initial capitalization of ACRM was USD 70 million. As demonstrated by Best's Capital Adequacy Ratio, the company's risk-adjusted capitalization is adequate to support its forecasted premium growth. ACRM's major risk component is underwriting risk, while the investment risk is relatively small. A.M. Best believes that the company's risk-adjusted capitalization will be maintained at an adequate level in the coming three years. However, if actual performance causes ACRM to deviate from its business plan, it could create pressure on the company's risk-adjusted capitalization.
After more than two years of development, ACRM still reserved a significant amount of incurred but not reported (IBNR) claims for the portfolio of underwriting year 2007 as at June 30, 2009. A.M. Best believes that the company has a prudent reserving practice.
Offsetting factors are the competitive reinsurance market and relatively high combined ratio driven by volatility in a growing book of business for a young company.
ACRM recorded a combined ratio of 102.2% and 161.4% in 2008 and 2007, respectively. Due to the company's unseasoned underwriting portfolio, a significant amount of the outstanding reserves are IBNR. ACRM's underwriting profitability is still subject to future claims development.
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.
Source: A.M. Best Co.
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