AM Best affirms FuSure Reinsurance Company Limited Credit Ratings

KUALA LUMPUR, May 26 (Bernama) -- Global credit rating agency, AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of ‘a-’ (Excellent) of FuSure Reinsurance Company Limited (FuSure) Hong Kong.

The outlook of these Credit Ratings (ratings) is stable, according to a statement.

The ratings reflect FuSure’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The ratings also reflect the implicit and explicit support from its ultimate parent, Tencent Holdings Limited (Tencent), including capital, business development, investment, risk management and operational support.

AM Best projects FuSure’s risk-adjusted capitalisation to remain at the strongest level throughout the forecast period up to 2025, as measured by Best’s Capital Adequacy Ratio (BCAR).

This result is underpinned by expected capital support from its shareholders, prudent investment strategy and retrocession support. Partially offsetting factors to the balance sheet strength include the modest size of the capital base and the projected fast-increasing underwriting leverage.

As a start-up reinsurer, FuSure projects moderate net losses during the first few years of operation. Notwithstanding, the company reported a significantly smaller-than-expected net loss in 2021, attributed to its higher earned premium with more favourable claims and expense experiences.

The company targets to achieve break-even by 2023 and deliver a mid-to-high single-digit return on equity by 2025. In addition, its book of business benefits from lowered underwriting volatility due to the sliding-scale commission structure of major treaties.

FuSure’s investment return is projected to remain stable at low single digit over the forecast period, given that most of its invested assets are short-term investment-grade bonds.

FuSure receives rating enhancement from implicit and explicit support from its ultimate parent, Tencent, which owns 85.01 per cent of shares of FuSure. FuSure is viewed as a long-term strategic investment of Tencent, which has a sizeable balance sheet, high financial flexibility and excellent credit fundamentals.

The stable outlooks reflect AM Best's expectation that FuSure will maintain its solid risk-adjusted capitalisation with strong shareholder support while developing its business profile without material adverse deviation from its business plan.

More details at www.ambest.com.

-- BERNAMA