POSITIVE OUTLOOK FOR THAILAND’S ASIAN RE - AM BEST

KUALA LUMPUR, June 14 (Bernama) -- Global credit rating agency, AM Best has affirmed the financial strength rating of B+ (Good) and the long-term issuer credit rating of “bbb-” (Good) of Thailand’s Asian Reinsurance Corporation (Asian Re).

The outlook of these credit ratings (ratings) is positive, reflecting Asian Re’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.

AM Best in a statement said the positive outlooks reflect its expectation that the successful execution of Asian Re’s business plan will lead to an improving trend in underwriting and operating performance metrics over the intermediate term.

Asian Re’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which was at the strongest level at year-end 2023, as measured by Best’s Capital Adequacy Ratio, and is expected to remain at this level over the medium term.

Notwithstanding, the company is viewed to have a modest absolute capital base of US$73 million at year-end 2023 as compared with regional reinsurance peers, which increases the sensitivity of its balance sheet to shock events. (US$1=RM4.71)

A significant offsetting balance sheet strength factor remains Asian Re’s high risk investment strategy, which includes the holding of a sizeable balance of cash and deposits in a sanctioned country and in a country that defaulted on its sovereign debt.

Viewed as marginal, albeit with an improving trend, Asian Re’s operating performance has exhibited volatility in recent years, with a five-year average return-on-equity ratio of 1.5 per cent and a combined ratio of 110.3 per cent (2019-2023), as calculated by AM Best.

The company has reported positive operating results in four of the past five years. Underwriting performance in 2020 was hampered by a reserve strengthening exercise and higher-than-expected claims experience.

Despite persistent market and regulatory challenges, Asian Re is expected to continue to implement several strategic initiatives and business partnerships aimed at expanding its underwriting portfolio and market presence over the medium term.

-- BERNAMA