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)
Moungmo Lee
General Manager
+852-2827-3402
moungmo.lee@ambest.com

Jeff Yeung
Senior Financial Analyst
+852-2827-3413
jeff.yeung@ambest.com

 

 
 

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

HONG KONG, December 12, 2012—A.M. Best Co. 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 ratings reflect Labuan Re’s adequate capitalization and its revised underwriting strategy to improve management of its underwriting risk.

In July 2012, Labuan Re issued subordinated bonds, which amounted to USD 55 million, in order to offset the losses from natural catastrophes that occurred in 2011 and from its participation in the run-off of syndicate 1965 through its investment in ACAL Holdings Pte Ltd.

In addition to the capital-raising exercise, Labuan Re has revised its underwriting strategies including reduction of its high risk overseas business in catastrophe-exposed markets or business with multi-territorial exposures, and tightened underwriting of highly unbalanced or unprofitable business. In A.M. Best’s opinion, Labuan Re’s risk-adjusted capitalization has been restored to an adequate level, which is supportive of its current ratings.

Offsetting these positive rating factors are the competitive reinsurance market in the region and the drag on Labuan Re’s profitability from the cost of servicing the subordinated debt.

Upward rating actions are unlikely in the near future. Conversely, negative rating actions could occur if Labuan Re’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 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. Key criteria utilized include: “Catastrophe Analysis in A.M. Best Ratings”; “Equity Credit for Hybrid Securities”; “Evaluating Country Risk”; “Insurance Holding Company and Debt Ratings”; “Risk Management and the Rating Process for Insurance Companies”; and “Understanding Universal BCAR.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, 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.