Oldwick, New Jersey (BUSINESS WIRE) - A.M. Best Co. has revised the rating outlook to positive from stable for Central Reinsurance Corporation (Central Re) (Taiwan).
At the same time, A.M. Best has affirmed Central Re's financial strength rating of A- (Excellent) and issuer credit rating (ICR) of "a-".
The ratings reflect Central Re's strengthened risk-based capitalization, continuous improvement in risk management and stable operating performance. The ratings also recognize the company's continued efforts in strengthening its overseas market presence in recent years.
Central Re's net premium leverage ratio (net premium written over adjusted capital and surplus) improved to 1.08 times due to higher retained earnings and an increase in equalization reserve in 2007. The company's adjusted capital and surplus (including equalization reserve) increased to TWD 12,055 million (USD 370 million) as at year-end 2007. In A.M. Best's view, the company's risk-adjusted capitalization is sufficient to support its current ratings as demonstrated by Best's Capital Adequacy Ratio (BCAR).
Central Re launched its enterprise risk management (ERM) program in 2004. A.M. Best noted that Central Re has incorporated the results of its risk management model in its strategic decision-making process. A.M. Best believes that a sound risk management program would help the company to better manage its risk exposure, leading to higher efficiency in capital management.
Central Re has maintained profitable and stable underwriting results with a combined ratio falling within the 90 per cent-97 per cent level in the past five years. Given that Taiwan is a catastrophe-prone country, Central Re's stable and consistent operating performance has demonstrated its prudent underwriting control and risk management practice.
Offsetting factors are the competitive market condition and limited reinsurance business growth in Taiwan.
Central Re has expanded its business to overseas reinsurance markets in recent years. Given the competitive environment in the reinsurance market in Asia, A.M. Best believes that it will be a challenge for Central Re to develop its market presence with meaningful scale and profitability in overseas markets.
Nonetheless, A.M. Best will continue to monitor the progress of the company's overseas expansion plan.
Central Re focused mainly on the domestic reinsurance market, with 94.6 per cent and 93.5 per cent of its gross premiums written generated from Taiwan in 2006 and 2007, respectively. Due to the market consolidation and higher premium retention in Taiwan's direct insurance market, the size of the reinsurance market in Taiwan has been shrinking in the past four years. Central Re's business growth is limited by the domestic reinsurance market.
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.
A.M. Best Co. Analysts Billy Kwan, +852-2827-3405
billy.kwan@ambest.com
or Terrence Wong, +852-2827-3403 terrence.wong@ambest.com
or Public Relations Jim Peavy ,+(1) 908-439-2200, ext. 5644
james.peavy@ambest.com
or Rachelle Morrow, +(1) 908-439-2200, ext. 5378
rachelle.morrow@ambest.com
At the same time, A.M. Best has affirmed Central Re's financial strength rating of A- (Excellent) and issuer credit rating (ICR) of "a-".
The ratings reflect Central Re's strengthened risk-based capitalization, continuous improvement in risk management and stable operating performance. The ratings also recognize the company's continued efforts in strengthening its overseas market presence in recent years.
Central Re's net premium leverage ratio (net premium written over adjusted capital and surplus) improved to 1.08 times due to higher retained earnings and an increase in equalization reserve in 2007. The company's adjusted capital and surplus (including equalization reserve) increased to TWD 12,055 million (USD 370 million) as at year-end 2007. In A.M. Best's view, the company's risk-adjusted capitalization is sufficient to support its current ratings as demonstrated by Best's Capital Adequacy Ratio (BCAR).
Central Re launched its enterprise risk management (ERM) program in 2004. A.M. Best noted that Central Re has incorporated the results of its risk management model in its strategic decision-making process. A.M. Best believes that a sound risk management program would help the company to better manage its risk exposure, leading to higher efficiency in capital management.
Central Re has maintained profitable and stable underwriting results with a combined ratio falling within the 90 per cent-97 per cent level in the past five years. Given that Taiwan is a catastrophe-prone country, Central Re's stable and consistent operating performance has demonstrated its prudent underwriting control and risk management practice.
Offsetting factors are the competitive market condition and limited reinsurance business growth in Taiwan.
Central Re has expanded its business to overseas reinsurance markets in recent years. Given the competitive environment in the reinsurance market in Asia, A.M. Best believes that it will be a challenge for Central Re to develop its market presence with meaningful scale and profitability in overseas markets.
Nonetheless, A.M. Best will continue to monitor the progress of the company's overseas expansion plan.
Central Re focused mainly on the domestic reinsurance market, with 94.6 per cent and 93.5 per cent of its gross premiums written generated from Taiwan in 2006 and 2007, respectively. Due to the market consolidation and higher premium retention in Taiwan's direct insurance market, the size of the reinsurance market in Taiwan has been shrinking in the past four years. Central Re's business growth is limited by the domestic reinsurance market.
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.
A.M. Best Co. Analysts Billy Kwan, +852-2827-3405
billy.kwan@ambest.com
or Terrence Wong, +852-2827-3403 terrence.wong@ambest.com
or Public Relations Jim Peavy ,+(1) 908-439-2200, ext. 5644
james.peavy@ambest.com
or Rachelle Morrow, +(1) 908-439-2200, ext. 5378
rachelle.morrow@ambest.com
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