AM Best upgrades Singapore Re’s credit rating

Rating agency AM Best has raised Singapore Re’s financial strength rating from A (Excellent) to A- (Excellent) and the issuer’s long-term credit rating from “a” (Excellent) to “a”. -” (Excellent), and awarded them a stable outlook.

According to the rating agency, they reflect Singapore Re’s balance sheet strength, which AM Best described as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

Additionally, AM Best said the ratings reflect the upgraded rating of ultimate parent Fairfax Financial Holdings Limited (Fairfax Group).

AM Best also noted that Singapore Re’s balance sheet strength is supported by its risk-adjusted capitalization, which is expected to remain at the highest level over the medium term.

He added that the company’s financial flexibility and capital management benefit from its ultimate ownership by the Fairfax Group,

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AM Best wrote: “The ratings upgrade reflects AM Best’s assessment of the further improvement in the Fairfax Group’s ratings. The rating upgrade takes into account explicit support in the form of a parental guarantee and implicit group support, including corporate governance, as well as access to shared resources and services across various business functions. .

“While Singapore Re’s operations represent only a small portion of the Fairfax Group’s consolidated revenues and profits, the company is seen as important to the group’s international expansion plans and provides access to local and regional businesses.

According to the announcement, AM Best considers Singapore Re to have a moderate risk investment portfolio and noted the company’s heavy use and reliance on retrocession to increase underwriting capacity and manage exposure. to cat accumulations and large unique risks.

Still, credit risk is mitigated by the use of highly rated on-lending counterparties, the rating agency added.

AM Best has rated Singapore Re’s operating performance as adequate, with a five-year average return on equity ratio of 3.9% (2017-2021).

He noted that the reinsurer’s underwriting performance improved slightly in 2021 and that investment income continues to contribute positively to operating income.

Overall, he pointed out, Singapore Re’s net profit showed a significant improvement in 2021 compared to the previous year, mainly supported by the capital gains realized on the disposal of buildings of placement.

According to AM Bet’s announcement, this latest rating action is the result of an accepted appeal from Singapore Re.

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