Standard & Poor’s Ratings Services has assigned its ‘BB-‘ long-term counterparty credit and insurer financial strength ratings and its ‘ruAA-‘ Russian national scale rating to Russian reinsurer Unity Re with a stable outlook. “The ratings are based on the company’s good capitalization and good quality of fixed-income investments,” explained credit analyst Victor Nikolskiy. However, S&P said “these positive factors are partly offset by the high industry risk of operating in the Russian Federation (foreign currency BBB+/Positive/A-2; local currency A-/Positive/A-2; Russia national scale rating ‘ruAAA’), combined with Unity Re’s marginal competitive advantages and limited operating performance track record.” Nikolskiy indicated that the “outlook is stable because we expect that Unity Re will preserve its competitive position, maintain a good level of capital adequacy–despite the company’s growth–and that the company will maintain its investment portfolio quality. In addition S&P stated that it “would consider revising the outlook to positive if Unity Re develops stronger competitive advantages and if the shareholders show continued capital support for the company. Conversely, any significant and sustained deterioration in earnings, capitalization, or investment portfolio quality could lead to negative rating actions.”
A.M. Best Co. has affirmed the financial strength rating of ‘B’ (Fair) and issuer credit rating of “bb+” of Nigeria’s Continental Reinsurance Plc with a stable outlook. “The ratings reflect Continental Re’s inadequate risk management, lack of security in its retrocession panel and significant execution risk in the company’s post-consolidation business plan,” Best explained. “Mitigating factors remain the company’s robust risk-adjusted capitalization and strong operating performance.” Best said it “considers Continental Re’s risk management as inadequate given that the company does not internally employ any formalized methodology in monitoring or assessing its catastrophe and accumulation exposures,” as well as “particular concerns about the reserving methodology adopted by Continental Re since the company does not specifically reserve for incurred but not reported (IBNR) losses with limited internal application of recognized actuarial methods used to establish reserves.”
A.M. Best Co. has affirmed the financial strength rating of ‘A-‘ (Excellent) and the issuer credit rating of “a-” of Macao’s Luen Fung Hang Insurance Company Limited (LFH) with a stable outlook. “The ratings reflect LFH’s profitable underwriting results, strong risk-based capitalization and solid business profile in the local market,” said Best. “The ratings also acknowledge the company’s bancassurance capabilities. Supported by its major bank shareholders, LFH distributes products through the branch network of its shareholders in Macao. The bancassurance strategy has allowed LFH to maintain its competitive edge in acquiring new business and servicing its existing customers. With a market share of 15 percent in terms of gross premiums written (GPW), the company was the third-largest insurer in Macao’s general insurance market in 2007.”
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