AM Best affirms Labuan Re's 'A-' financial strength rating

KUALA LUMPUR, Oct 31 (Bernama) -- International credit rating agency AM Best has affirmed Labuan Reinsurance (L) Ltd’s (Labuan Re) financial strength rating of A- (excellent) and the long-term issuer credit rating of “a-” (excellent), with stable outlooks.

AM Best said the ratings reflected Labuan Re’s balance sheet strength, which was assessed as very strong as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

“Labuan Re’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation that is expected to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio,” the rating agency said in a statement.

AM Best viewed Labuan Re as having a moderate risk investment strategy with investment assets predominantly held in cash, deposits and high-quality fixed-income instruments, albeit with a modest exposure to equities and real estate.

“Labuan Re’s operating performance is adequate. Despite historically exhibiting elevated volatility as a result of catastrophe-related losses, its underwriting performance has improved over the past few years following remedial actions taken by management.

“The company recorded a large unrealised fair value investment loss in 2022 as a result of interest rate movements. While asset value changes may drive short-term volatility, Labuan Re’s performance metrics are expected to remain aligned with the adequate assessment over the medium term,” it said.

AM Best assessed Labuan Re’s business profile as “neutral”, given its position as a well-established regional non-life reinsurer.

“The company’s business profile continues to benefit from portfolio diversification from its participation as a corporate member in Lloyd’s of London syndicates,” it added.

-- BERNAMA