A.M. Best Upgrades Ratings of CBL Insurance Limited

SINGAPORE--(BUSINESS WIRE)-- A.M. Best has upgraded the financial strength rating to B++ (Good) from B+ (Good) and the issuer credit rating to “bbb” from “bbb-” of CBL Insurance Limited (CBL) (New Zealand). The outlook for the ratings has been revised to stable from positive.

The rating actions mainly recognize CBL’s continued strong earnings trend driven by profitable underwriting, which has enabled it to consistently grow its capital base and regulatory solvency position. Additionally, the rating upgrade acknowledges CBL’s demonstrated capability of underwriting niche insurance lines that are expected to achieve favorable loss and combined ratios.

Over the past three years, the combined ratio of CBL remained very strong and consistent at around 85%; though net premium revenue, on average, compounded at an annual rate of 50%. The favorable underwriting experience largely reflects the company’s growing access to a desirable book of European business.

These positive rating factors are mainly offset by CBL’s high underwriting leverage. Underwriting leverage had been heightened, more so earlier in the recent five-year period, by very significant growth rates in premium revenue, which had outpaced the growth rate in capital.

The outlook is stable reflecting the expectation that CBL’s favorable operating trends and reduced underwriting leverage will be maintained.

A.M. Best believes that a positive rating action for CBL is unlikely in the near to medium term, unless there is a substantial increase in its tangible capital base, coupled with a substantial reduction in underwriting leverage. The ratings of CBL may be subject to negative rating pressures should the company’s underwriting leverage rise or operating trends begin to deteriorate. Additionally, CBL’s ratings may experience downward pressure if there is any significant increase in the consolidated debt-to-tangible-capital ratio of its holding company or its ultimate parent.

The methodology used in determining these interactive ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

• Insurance Holding Company and Debt Ratings
• Rating Members of Insurance Groups
• Rating Surety Companies
• Risk Management and the Rating Process for Insurance Companies
• Understanding Universal BCAR

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/20150611005714/en/

A.M. Best Company, Inc.
Jason Shum, +65-6589-8400, ext. 217
Financial Analyst
[email protected]
or
Chi-Yeung Lok, +65-6589-8400, ext. 211
Senior Financial Analyst
[email protected]
or
Christopher Sharkey, +(1) 908-439-2200, ext. 5159
Manager, Public Relations
[email protected]
or
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Company, Inc.

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