Press Release

 
 

A.M. Best Affirms Ratings of Labuan Reinsurance (L) Ltd.

 

CONTACTS:


Public Relations
Jim Peavy
Assistant Vice President, Public Relations
+(1) 908 439 2200, ext. 5644
james.peavy@ambest.com

Rachelle Morrow
Senior Manager, Public Relations
+(1) 908 439 2200, ext. 5378
rachelle.morrow@ambest.com

Analyst(s)
Angela Chow
Associate Financial Analyst
+852-2827-3407
angela.chow@ambest.com

Jeff Yeung
Associate Director
+852-2827-3413
jeff.yeung@ambest.com

 

 
 

A.M. Best Affirms Ratings of Labuan Reinsurance (L) Ltd

HHONG KONG, December 12, 2013—A.M. Best Asia-Pacific Limited has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Labuan Reinsurance (L) Ltd (Labuan Re) (Malaysia). The outlook for both ratings is stable.

The rating affirmations reflect Labuan Re’s adequate risk-adjusted capitalization, continuing improved operating performance and prudent underwriting strategy.

Labuan Re’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supportive of its current ratings as a result of the company’s positive earnings, capital raising through the issuance of subordinated bonds (USD 55 million) in July 2012, and prudent dividend policy.

Labuan Re’s operating results turned around in 2012; the company reported a net profit after tax of USD 1.7 million from a net loss after tax of USD 58.9 million in 2011, which was driven by the company’s favorable investment income and underwriting strategy to focus on risk selection while avoiding aggressive premium growth.

The company has been reviewing and updating its loss development from the Thailand flooding since November 2011; the total gross loss estimate is approximately USD 58 million.

Offsetting these positive rating factors include the intense competition in the Asian reinsurance market and the pressure on Labuan Re’s profitability from the cost of servicing the subordinated debt.

Labuan Re is well positioned at its current rating level. Negative rating actions could occur if the company’s operating performance materially deviates from its projections, or its risk-adjusted capitalization declines to a level 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.

   

 

 
 

FITCH AFFIRMS MALAYSIA'S LABUAN REINSURANCE AT 'A-'; WITHDRAWS RATING

 

CONTACTS:


Primary Analyst:
Wan Siew Wai

Senior Director
Singapore
+65 6796 7217
Siewwai.wan@fitchratings.com

Secondary Analyst:
Jeffrey Liew
Senior Director
Hong Kong
+852 2263 9939

jeffrey.liew@fitchratings.com

Committee Chairperson:
Chris Waterman
Managing Director
+44 20 3530 1168


Media Relations:
Leslie Tan
Singapore,
+65 67 96 7234
leslie.tan@fitchratings.com

 

 
 

FITCH AFFIRMS MALAYSIA'S LABUAN REINSURANCE AT 'A-'; WITHDRAWS RATING

Fitch Ratings-Singapore/Hong Kong-21 November 2013: Fitch Ratings has affirmed Malaysia-based Labuan Reinsurance (L) Ltd's (Labuan Re) Insurer Financial Strength (IFS) rating at 'A-'. The Outlook is Stable. The agency has simultaneously withdrawn the rating.

Fitch has withdrawn the ratings as Labuan Re has chosen to stop participating in the rating process. Fitch has determined that Labuan Re's public disclosures are not sufficient to allow Fitch to maintain
the ratings. Accordingly, Fitch will no longer provide ratings or analytical coverage for Labuan Re.

KEY RATING DRIVERS

The rating reflects Labuan Re's diverse geographical spread with limited business concentration risks, highly liquid investment mix and manageable financial leverage. However, the company faces challenges to manage the high catastrophe exposure of its business portfolio and to increase its market presence amid keen competition.

Labuan Re in July 2012 issued a private placement of USD55m callable cumulative subordinated bonds with a tenor of up to 50 years to boost capital resources.

Consequently, financial leverage, measured as debt to total capital, rose to 28% at end-2012 from 0% at end-2011, although this is still acceptable for its current rating.

The Stable Outlook reflects Fitch's view that the company is expected to continue adopting a prudent underwriting approach with emphasis on bottom-line profitability as opposed to mere top-line growth.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, http://www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.