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Press Release |
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A.M. Best Affirms Ratings of Labuan Reinsurance (L) Ltd.
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CONTACTS:
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Public
Relations
Jim Peavy
+(1) 908 439 2200, ext. 5644
james.peavy@ambest.com
Rachelle
Morrow
+(1) 908 439 2200, ext. 5378
rachelle.morrow@ambest.com
Analyst(s)
Billy
Kwan
+852-2827-3405
billy.kwan@ambest.com
Moungmo Lee
+852-2827-3402
moungmo.lee@ambest.com |
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A.M. Best Affirms Ratings of Labuan Reinsurance (L) Ltd.
FOR IMMEDIATE RELEASE
OLDWICK, N.J., OCTOBER 25, 2007
A.M. Best Co. has
affirmed the financial strength rating of A- (Excellent) and the
issuer credit rating of "a-" of Labuan Reinsurance (L) Ltd. (Labuan Re) (Malaysia). The outlook for both ratings is
stable.
The ratings reflect Labuan Re's stable underwriting
performance, conservative investment portfolio and well balanced
portfolio with diversified geographic risk.
Labuan Re's loss
ratio further improved to 61% in 2006 from 65% in 2005. The company
maintained its loss ratio below 65% over the past four years,
despite it being hit with several catastrophe events in recent
years. Although the expense ratio showed an upward trend, the
company's combined ratio was below 100% over the past four
years.
Labuan Re has a conservative investment portfolio. As
at 31 December 2006, 37% of Labuan Re's invested assets were held in
cash and 47% in fixed income securities.
As of fiscal
year-end 2006, the company's business spread comprised 25% in
Malaysia, 47% in Lloyd's and 28% in other overseas markets in the
Middle East and Asia. The participation in Lloyd's increased
international diversification of the company's underwriting
portfolio. The exposure to Europe and North America in the Lloyd's
portfolio offers instant diversification to Labuan Re's primarily
Asian risk exposure.
Offsetting factors include high premium
growth and intense competition in the Asian market.
Labuan Re
expects to have high premium growth in 2007, which will lead to a
higher insurance risk. Although the company's current risk-adjusted
capital level is adequate to support its forecasted premium growth,
A.M. Best will closely monitor it going forward.
In recent
years, there has been a number of new reinsurance and retakaful
companies set up in Malaysia and the Middle East; Labuan Re will be
in direct competition with these companies.
For Best's
Ratings, an overview of the rating process and rating methodologies,
please visit Best's Rating Center.
Founded in 1899,
A.M. Best Company is a global full-service credit rating
organization dedicated to serving the financial and health care
service industries, including insurance companies, banks, hospitals
and health care system providers.
View a list of companies related to this press
release. The list will include Best's Ratings along with links to
additional company specific information including related news and
reports.
A.M. Best’s credit ratings are independent and objective opinions,
not statements of fact. A.M. Best is not an Investment Advisor, does
not offer investment advice of any kind, nor does the company or its
Ratings Analysts offer any form of structuring or financial advice.
A.M. Best’s credit opinions are not recommendations to buy, sell or
hold securities, or to make any other investment decisions.
A.M. Best receives compensation for interactive rating
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receive compensation from rated entities for non-rating related
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Best’s rating process, including handling of confidential
(non-public) information, independence, and avoidance of conflicts
of interest, please read the A.M. Best Code of
Conduct.
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Copyright ©
2007 by A.M. Best Company, Inc. ALL RIGHTS
RESERVED
No part of this report may be distributed in any electronic
form or by any means, or stored in a database or retrieval system,
without the prior written permission of the A.M. Best Company. Refer
to our terms
of use for additional details. |
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Fitch Assigns IFS Rating To Labuan Reinsurance (L) Ltd
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CONTACTS:
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John Miles
Brisbane
+61 7 3222 8616
john.miles@fitchratings.com
Wan Siew Wai
Singapore
+65 6796 7217
Siewwai.wan@fitchratings.com
Jeffrey Liew
Hong Kong
+852 2263
9939
jeffrey.liew@fitchratings.com
Media Relations:
Shivani Sundralingam
Singapore,
+ 65 6796 7215
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Fitch Affirms Labuan Re’s ‘A-’ IFS Rating
Fitch Ratings-Singapore/Singapore–18 December 2007: Fitch Ratings has today affirmed Labuan
Reinsurance (L) Ltd’s (Labuan Re) ‘A-’ (A minus) Insurer Financial Strength (IFS) rating. The Outlook
on the rating is Stable.
While Labuan Re is a relatively small global reinsurance company, it does have a reasonable level of
geographic diversification and maintains a strong capital position - in addition to its paid-up capital,
Labuan Re has a further USD50 million of committed, but as yet uncalled capital. Fitch considers this
to be prudent as Labuan Re is exposed to countries prone to natural catastrophes such as earthquakes
and hurricanes, but at the same time it appears to have adequate reinsurance protections in place.
Financial performance has been consistently sound, with the company gathering momentum,
particularly via its participation in Lloyds. More broadly, Labuan Re has successfully diversified its
business to reduce its reliance on Malaysia. In the past, Malaysia accounted for as much as 70% of
Labuan Re’s premium income, but now this ratio is below 30%. Nonetheless, it is also worth noting
that while Labuan’s network is widespread, its presence in each market is modest. Even in its home
market of Malaysia, it only holds a 5.3% market share.
Performance in 2006 was influenced by a slight softening of premium rates in non-catastrophe affected
markets like Malaysia, but more stable rates, terms and relatively benign claims were experienced in the catastrophe-affected markets of Lloyds and Thailand. Furthermore, the investment performance for the
year was good, with yields exceeding 6.0%. Labuan Re’s immediate performance outlook is stable,
although its profitability remains exposed to the impact of natural catastrophes. Despite this, it is well
capitalised and has suitable reinsurance protections in place based on modest net retention limits.
Incorporated on 14 September 1992, Labuan Re is 20% owned by Malaysian Reinsurance Berhad,
which is the national reinsurer established by the government. It appears that Labuan Re’s role is to
concentrate on international opportunities, although it still maintains a modest presence in Malaysia.
Labuan Re is licensed under the Offshore Insurance Act, 1990 and incorporated in the International
Offshore Financial Centre of Labuan, which is an island off the coast of Sabah in East Malaysia.
Labuan is a federal territory of Malaysia and was launched as a financial centre in 1990. It is not a
sovereign state and possess no separate legislature, but rather is directly administered by the
government of Malaysia.
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.
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