AM Best affirms credit ratings of Singapore’s ERGO Insurance

KUALA LUMPUR, Nov 11 (Bernama) -- Global credit rating agency, AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Singapore’s ERGO Insurance Pte Ltd (ERGO Insurance).

In a statement, AM Best said the outlook of these credit ratings (ratings) is stable.

The ratings reflect ERGO Insurance’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.

The ratings also factor in rating enhancement from the company’s ultimate parent, Munich Reinsurance Company (Munich Re).

ERGO Insurance is a wholly-owned subsidiary of ERGO Group AG, which is the primary insurance arm of Munich Re.

ERGO Insurance’s strong balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which was at a very strong level in 2021, and is expected to remain at least at this level over the near term, as measured by Best’s Capital Adequacy Ratio.

Despite operating losses over a number of years having materially eroded the shareholders’ equity of the company, financial support from the Munich Re group has helped it to maintain capital adequacy.

AM Best views the company’s operating performance as marginal. Although underwriting losses have contracted in recent years with the company having sought to reprice or non-renew underperforming business, the combined ratio has been pressured by a reduced business scale resulting in a high expense ratio.

In addition, AM Best views ERGO Insurance’s business profile as limited. The company is a non-life insurer in Singapore, with a market share of approximately one per cent, based on 2021 gross written premium.

-- BERNAMA