AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of 'a' (Excellent) of
The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Central Re's balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management.
Central Re's balance sheet strength is underpinned by its strongest level of risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR). In 2022, the company experienced significant claims arising from pandemic insurance policies, as well as unrealised investment losses that dragged its capital and surplus. To bolster capital strength and prepare for future business development, the company received capital injection of
Underwriting performance of Central Re's domestic non-life portfolio deteriorated in 2022, mainly driven by a significant pandemic insurance loss, while its domestic life business continued to deliver a solid stream of earnings. The company's overseas non-life business grew at a more subdued rate this year while underwriting results were impacted by some catastrophe losses. Given that the pandemic insurance loss is a one-off event, going forward, AM Best expects Central Re should be able to restore its underwriting profitability over the short to intermediate term. Investment results benefitted from stable investment income from the fixed-income assets, as well as dividend income, while fluctuations in currency exchange rates have added volatility to the investment results over the last few years. The company posted a consolidated net profit of
Leveraging its long operating history as
Negative rating actions could occur if there is a significant decline in Central Re's risk-adjusted capitalisation, due to unexpected large underwriting or investment losses. Negative rating actions could also arise if the company experiences sustained and adverse deterioration in its operating performance. Positive rating actions could occur if Central Re's domestic and overseas underwriting portfolios demonstrate sustained and favourable results to strengthen its overall operating performance, while supporting its current business profile.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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