AM Best Upgrades Credit Ratings of Asian Reinsurance Corporation
- news2u
- May 31
- 2 min read
SINGAPORE, May 29 (Bernama-BUSINESS WIRE) -- AM Best has upgraded the Financial Strength Rating to B++ (Good) from B+ (Good) and the Long-Term Issuer Credit Rating to “bbb” (Good) from “bbb-” (Good) of Asian Reinsurance Corporation (Asian Re) (Thailand). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
The ratings reflect Asian Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The rating upgrades reflect Asian Re’s sustained improvement in operating performance in recent years, evidenced by a return-on-equity ratio of 9.4% in 2024 (2023: 4.6%). The company has achieved positive operating results in four of the last five years. Underwriting performance in 2020 was hampered by a reserve strengthening exercise and higher-than-expected claims experience. However, the combined ratio improved to 85.3% in 2024 (2023: 101.6%) following remediation actions undertaken by the company. The company’s investment returns, arising mainly from interest income, have consistently supported operating earnings. Prospectively, AM Best expects Asian Re’s operating performance to be supported by sound underwriting profitability and robust investment returns.
Asian Re’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which was at the strongest level at year-end 2024, as measured by Best’s Capital Adequacy Ratio (BCAR), and is expected to remain at that level over the medium term. Notwithstanding, the company is viewed to have a relatively modest absolute capital base of USD 76 million at year-end 2024, as compared with regional reinsurance peers, which increases the sensitivity of its balance sheet to shock events. A significant offsetting balance sheet strength factor remains Asian Re’s high-risk investment strategy, which includes the holding of a sizable balance of cash and deposits in a sanctioned country and, to a much lesser extent, in a country that historically defaulted on and subsequently restructured its sovereign debt. Although the company has been actively reducing its holdings of some of these assets in recent years, AM Best’s view is this investment strategy exposes Asian Re to heightened credit and liquidity risks.
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