S&P praises improved underwriting discipline of Asia Capital Re

Asia Capital Re has improved its underwriting discipline and is in good shape to achieve stable growth over the next two years, according to rating agency S&P Global Ratings (S&P), which has affirmed the reinsurer’s financial strength rating at ‘A-’, and maintained its outlook for the Singapore-headquartered reinsurer at ‘Stable’.

In its report dated 16 August 2019, S&P said that it expects Asia Capital Re to “maintain its extremely strong capitalization while achieving stable growth over the next two years… underpinned by its selective growth strategy”.

In 2018, Asia Capital Re launched its 2021 strategy to transform its business and operations to enhance client response, simplify service platforms, optimise operational resources, extend its suite of products and services, and globalise its underwriting portfolio.

In its assessment of Asia Capital Re’s strategic efforts, S&P noted the reinsurer’s progress on improving underwriting discipline against the backdrop of 2018’s high concentration of Asian catastrophe events. S&P said it expects the momentum to continue given the management’s focus “on diversification and remediation, supported by its expense management and efforts to improve operational efficiency”.

The global rating agency also highlighted that “Asia Capital Re’s capitalization is stronger than regional peers’” and pointed out that its “exposure to catastrophe risks as a percentage of total capital is conservative relative to global peers’”.

S&P also expressed the view that Asia Capital Re’s “extremely strong capitalisation” as well as its “liquid” and “sizeable high quality fixed income assets support growth and help absorb the volatility of its reinsurance business”.

Asia Capital Re’s ‘A-’ financial strength rating has been affirmed annually since it was first rated by S&P in 2008. The reinsurer’s financial strength is also rated ‘A-’ by AM Best.

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