HONG KONG--(BUSINESS WIRE)--A.M. Best Asia-Pacific Limited has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of Evergreen Reinsurance Company, Ltd. (ERCL)(Bermuda). The outlook for both ratings is stable.
The ratings reflect ERCL’s strong risk-adjusted capitalization, track record of favorable operating performance and prudent risk management. The ratings also recognize ERCL’s role in providing insurance/reinsurance solutions as the pure insurance captive of Evergreen Group, a Taiwan-based international logistics and transportation conglomerate with a core business focus on marine and aviation.
ERCL’s proven quality book of in-house business, in conjunction with the release of prior year reserves, contributed to favorable underwriting results over the past few years. The company’s investment in fixed income assets (mainly fixed deposits) has consistently generated positive interest income to support its operating earnings.
As an integral part of Evergreen Group’s overall risk management framework, ERCL plays a key role in managing the group’s risk through a prudent reinsurance arrangement and risk control capabilities. Management performs a regular review of its net retained limit by business lines to ensure that risk exposures are falling within a manageable level relative to its capitalization.
Offsetting rating factors include the potential capital demand from Evergreen Group’s subsidiaries and its significant gross exposure to marine and aviation claims. Nonetheless, these risks are protected by reinsurance facilities supported by a panel of high quality reinsurers.
While positive rating actions for ERCL are unlikely in the near term, negative rating actions could occur in the event of a continued adverse operating performance and/or a significant decline in its risk-adjusted capitalization. In addition, deterioration in Evergreen Group’s credit profile of could negatively impact ERCL's ratings.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
The methodology used in determining these 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.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
A.M. Best Asia-Pacific Limited is a subsidiary of A.M. Best Company. A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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