HONG KONG--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Marble Reinsurance Corporation (Marble Re) (Micronesia). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Marble Re’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The balance sheet strength is well-supported by Marble Re’s risk-adjusted capitalisation, which is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s capital base, albeit small, is viewed to be sufficient supported by low net underwriting leverage and minimal investment risk from a highly liquid and conservative investment portfolio. Although the company has relatively high dependence on reinsurance, the risk is mitigated by its high quality and well-diversified reinsurance panel.
Marble Re’s operating performance has been consistently strong and stable with a five-year average combined ratio of 59% (2018-2022). For the fiscal year ended 31 March 2023, the company recorded notable growth in premium income and net profit due to the strong performance of Marubeni Corporation’s trading business, which was attributable to higher commodity prices and foreign exchange benefits from Japanese Yen depreciation. Marble Re’s combined ratio is expected to remain favourable and below 60%. Notwithstanding the moderate volatility in its major business line, marine cargo insurance, primarily due to fluctuations in the commodity price, AM Best expects that Marble Re’s underwriting margin will remain favourable over the medium term supported by strict underwriting discipline and a conservative reinsurance programme.
As a wholly owned subsidiary and a single-parent captive of Marubeni Corporation, which is one of Japan’s largest general trading companies, Marble Re provides reinsurance and insurance protection against group-related risks across different regions. Marble Re is well-integrated within the parent group with respect to risk management, corporate governance and internal control systems.
Negative rating actions could occur if there are substantial losses caused by a material shift in Marble Re’s risk appetite or if there is significant deterioration in Marubeni Corporation’s credit profile, including its operating profitability, financial leverage and interest coverage levels. Positive rating actions could occur if the company demonstrates sustained and notable improvement in its balance sheet strength fundamentals or material growth in its capital base.
AM 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.
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