HONG KONG, July 27, 2021--(BUSINESS WIRE)--Please replace the release dated July 23, 2021 with the following corrected version due to two revisions.
The updated release reads:
AM BEST AFFIRMS CREDIT RATINGS OF CENTRAL REINSURANCE CORPORATION
AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of "a" (Excellent) of Central Reinsurance Corporation (Central Re) (Taiwan). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Central Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management.
Central Re’s balance sheet strength is underpinned by its robust level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s capital and surplus continued to grow organically in 2020, mainly driven by partial profit retention and supported by positive operating results. The company’s investment portfolio remains diversified and liquid, with a majority of those assets in cash and investment-grade bonds. Going forward, AM Best expects the company’s investment strategy to remain prudent and mainly focused on low-risk, fixed-income investments.
Central Re’s business continued to expand in 2020 while maintaining a track record of positive operating results over the past five years, supported by positive results in its underwriting and investment portfolios. Notwithstanding, the company’s net loss ratio for its domestic non-life business deteriorated in 2020; this was mainly due to an increase in the fire line’s net loss ratio, while the claims experience for other business lines remained relatively stable. The company’s overseas business continued to expand at a moderate pace with double-digit growth and an improved net loss ratio for overseas business as underwriting profit returned in 2020. The company’s positive investment results remain supportive of the overall operating results, underpinned by stable investment income, generated from the fixed income assets in the company’s investment portfolio. Nevertheless, fluctuations in currency exchange rates have added volatility to the company’s investment results in the past few years.
Leveraging its long operating history as Taiwan’s sole domestic reinsurer, Central Re maintains solid and long-term relationships with local cedants. Over the past few years, the company has expanded into overseas markets at moderate growth rates. Targeted markets include Europe, the Middle East and Southeast Asia. AM Best expects the company to uphold its prudent underwriting approach and strive for sustainable profitability, and benefit over the intermediate term from enhanced diversification in both geography and clientele.
Positive rating actions could occur if the company’s overseas underwriting portfolio demonstrates sustained and favourable results to strengthen the overall operating performance and support the company’s current business profile assessment. Negative rating actions could occur if there is a significant decline in the company’s risk-adjusted capitalisation, or if the company experiences sustained and adverse deterioration in its operating performance from the company’s underwriting and investment portfolio.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on AM 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 see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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