SINGAPORE--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” of EQ Insurance Company Limited (EQ) (Singapore). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect EQ’s adequate risk-adjusted capitalization, which has benefited from capital injections by its parent company, Citystate Capital Asia Pte. Ltd. EQ’s capital position grew by a cumulative average of approximately 7% in the five years ending Dec. 31, 2016. Its risk-adjusted capitalization is supported by low underwriting leverage and prudent investments that are held predominantly in cash and bonds.
Steady returns from EQ’s investment portfolio have acted as a buffer to reduce the potential impact of underwriting losses on earnings and risk-adjusted capitalization.
Offsetting rating factors are EQ’s modest business profile amid an increasingly challenging operating landscape and a declining trend in its operating performance. As a small player in the Singapore market, price competition has eroded EQ’s profitability. This is reflected in EQ’s weakening underwriting performance, which remains below market average.
Positive rating momentum could result from consistent profitability that is better than its peers. Negative rating pressure could arise from a failure to reverse the weakening trend in its operating performance or deterioration in its parent’s financial condition.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.
