A.M. Best Assigns Ratings to Tune GenRe Ltd.

SINGAPORE--(BUSINESS WIRE)-- A.M. Best has assigned a financial strength rating of B++ (Good) and an issuer credit rating of “bbb+” to Tune GenRe Ltd. (TGR) (Malaysia). The outlook assigned to both ratings is stable.

The assigned ratings consider TGR’s business profile, strong operating results and its business plan over the next three years. As a subsidiary of Tune Ins Holdings Berhad (TIH), TGR’s role is to maximize the TIH’s group’s retention of travel insurance premiums.

As an affiliate of AirAsia Berhad and its associates (AirAsia Group), TGR benefits from the long-term contracts that it has with the AirAsia Group. This provides TGR with exclusive access to a profitable and growing portfolio of travel insurance risks. TGR’s operating performance has produced strong and stable returns since 2012, its first full year of operation.

Offsetting rating factors include high premium leverage and significant credit risk concentration. High net premium leverage has been a drag on TGR’s risk-adjusted capitalization. Under the company’s business plan, this drag will diminish over the next three years, as capital is expected to grow through retained earnings. TGR holds a significant amount of insurance receivables (amounting to 70% of its capital as at 31 December 2014), which is ultimately due from the AirAsia Group. Its ability to manage this risk is limited by its reliance on the AirAsia Group.

Successful execution of its business plan, as well as a significant reduction in its credit risk concentration from insurance receivables could result in positive rating momentum.

Negative rating pressure could arise from higher than expected premium leverage due to lower than planned earnings retention, as well as any deterioration to AirAsia Group’s business profile.

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150706005712/en/

A.M. Best
Chi Yeung Lok
Senior Financial Analyst
+65 6589 8400, ext. 211
[email protected]
or
Moungmo Lee
General Manager
+65 6589 8400, ext. 210
[email protected]
or
Christopher Sharkey
Manager, Public Relations
+(1) 908 439 2200, ext. 5159
[email protected]
or
Jim Peavy
Assistant Vice President, Public Relations
+(1) 908 439 2200, ext. 5644
[email protected]

Source: A.M. Best Company

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