SINGAPORE, March 1 (Bernama-BUSINESS WIRE) -- A.M. Best has downgraded the Financial Strength Rating to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating to “bbb-” from “bbb” of Tugu Insurance Company Limited (TIC) (Hong Kong). The outlook of these Credit Ratings (ratings) is negative.
The ratings reflect TIC’s balance sheet strength, which A.M. Best categorizes as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).
The negative outlooks are based primarily on uncertainty regarding TIC’s capitalization. It also reflects the company’s low liquidity buffers.
TIC’s balance sheet strength is currently strong and supported by low underwriting leverage ratios. However, liquidity buffers are low and there is uncertainty over TIC’s future capitalization, as its parent intends to dispose of its ownership of TIC and repatriate major assets. While A.M. Best expects that TIC will be capitalized to satisfy regulatory requirements, no details are available to assess its risk-adjusted capitalization after the change in ownership.
TIC’s business profile is limited. The company has faced challenges in finding profitable sources of premium growth, which has led to combined ratios that have been above industry average in the five years to Dec. 31, 2017.
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