Ratings Rounup: Arab Re, Century (Guam) & (Saipan)

A.M. Best Co. has affirmed the financial strength rating of ‘B+’ (Good) and the issuer credit rating (ICR) of “bbb-” of Lebanon’s Arab Reinsurance Company S.A.L., both with stable outlooks. “The ratings reflect Arab Re’s strong current and prospective risk-adjusted capitalization and good operating performance,” said best. “An offsetting factor is the company’s limited growth prospects.” Best also noted that “Arab Re has maintained a strong risk-adjusted capital position in recent years despite growing levels of net premium income.” Best added that it “expects Arab Re to preserve its strong capital position in 2009.” The rating agency also noted that the reinsurer had suffered from several big loss events in 2007, and that it “remains a relatively small company in terms of premium base when compared to global reinsurers operating within the same markets.” Best said it “believes that an increasingly competitive environment in addition to increasing rating requirements in particular territories is going to materially hinder Arab Re’s premium expansion plans in 2009. Despite these obstacles, A.M. Best anticipates that Arab Re will continue to grow premium income and improve its market visibility.”

A.M. Best Co. has assigned a financial strength rating of B+ (Good) and an issuer credit rating of “bbb-” to Century Insurance Company of Guam (CIC Guam) with stable outlooks. “The ratings reflect CIC Guam’s adequate capitalization, sound underwriting result and stable investment income. The ratings also recognize the continual operational support from Century Insurance Co., Ltd. (CIC Saipan), though the ownership of CIC Guam will be transferred to its ultimate parent, Tan Holdings Corporation.” Best also noted that in order to “facilitate its ongoing business growth, CIC Guam was converted from a branch operation under CIC Saipan to a locally established subsidiary in 2006. Through its exclusive agent, Aon Insurance Micronesia, CIC Guam expanded its gross premiums written to USD 14.6 million in 2007. In view of the macroeconomic conditions in Guam, CIC Guam expects to further grow its book and build a larger client base in the competitive Guam market.

A.M. Best Co. has affirmed the financial strength rating of ‘B+’ (Good) and the issuer credit rating of “bbb-” of Century Insurance Co., Ltd. (CIC Saipan), which is located in the Northern Mariana Islands. The outlook for both ratings is stable. Best said the “ratings reflect CIC Saipan’s solid market position in Saipan, improvement in premium leverage and stable investment income. The ratings also acknowledge the company’s efforts to achieve a better spread of geographical risk through steady business expansion in Guam and its plan to lower its asset risk on a stand-alone basis by transferring its affiliates—namely Century Insurance Company of Guam (CIC Guam) and Century Insurance Papua New Guinea—to its immediate holding entity, Tan Holdings Corporation.” Best also noted that CIC Saipan “recorded improvement in net premium leverage on a consolidated basis from 1.7 times in 2006 to 1.54 times in 2007 due to higher surplus growth. CIC Saipan’s capitalization on a consolidated basis, as measured by Best’s Capital Adequacy Ratio (BCAR), remained adequate to support its risk profile in 2007, while the BCAR was weak on a standalone basis. Nonetheless, CIC Saipan’s plan to transfer the ownership of CIC Guam and Century Insurance Papua New Guinea to its immediate parent will reduce both CIC Saipan’s assets and underwriting risk on a stand-alone basis, although the planned capital repatriation of USD 2.0 million and the proposed USD 2.5 million of dividend payment after the transfer also will greatly reduce the company’s capitalization on an absolute basis in 2008.” In addition Best indicated that the Company “has established a solid presence in both the Commonwealth of the Northern Mariana Islands (CNMI) and Guam through partnering with two key distributors. In an attempt to facilitate its ongoing business growth as well as diversify its book, CIC Saipan converted its Guam operation branch into a locally established operating subsidiary in 2006 and launched another subsidiary in Papua New Guinea in 2007.”