HONG KONG--(BUSINESS WIRE)--A.M. Best Asia-Pacific Limited has affirmed the financial strength rating of A- (Excellent) and the issuer credit ratings of “a-” of ACR ReTakaful Berhad (ACR Retakaful) (Malaysia) and ACR ReTakaful MEA B.S.C. (c) (ACR ReTakaful MEA) (Bahrain). A.M. Best also has affirmed the ICR of “bbb-” of ACR ReTakaful Holdings Limited (United Arab Emirates). The outlook for all ratings is stable.
The ratings reflect ACR ReTakaful and ACR ReTakaful MEA’s adequate capitalization and enhanced enterprise risk management. A.M. Best also acknowledges the companies’ disciplined and prudent investment strategies.
During the early part of 2012, ACR ReTakaful and ACR ReTakaful MEA’s capitalization was weakened, largely due to unfavorable underwriting performance as a result of the catastrophe losses that occurred in the Asia-Pacific region in 2011. Nonetheless, the companies took measures to restore capital strength through reducing the net retention of underwriting risks and reducing catastrophe exposures. ACR ReTakaful and ACR ReTakaful MEA’s risk-adjusted capitalization is expected to be adequate in the near to mid-term and is supportive of their current ratings.
Offsetting these positive rating factors are the companies’ volatile historical underwriting results and the competitive reinsurance market in the Asia-Pacific region.
In view of the volatile historical underwriting results, the companies have enhanced their underwriting risk management through stricter risk selection and more rigorous portfolio management. Nonetheless, competition from existing reinsurers and new entrants into the Asia-Pacific reinsurance market remain challenging. A.M. Best will continue to closely monitor the effectiveness of the companies’ risk management measures and the financial performance of their operations against their stated business plans.
Future positive rating actions could occur if the companies further improve their risk-based capitalization and demonstrate the ability to achieve a consistently favorable operating performance. Conversely, negative rating actions could occur if the companies’ operating performances materially deviate from their projections, or their risk-adjusted capitalization levels decline below A.M. Best’s expectations.
The methodology used in determining these interactive 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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