AM Best Affirms Credit Ratings of MS First Capital Insurance Limited

AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” (Excellent) of MS First Capital Insurance Limited (MSFC) (Singapore). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect MSFC’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also factor rating enhancement from Mitsui Sumitomo Insurance Company Ltd (MSI), for which the ultimate parent is MS&AD Insurance Group Holdings, Inc. (MS&AD).

MSFC’s balance sheet strength assessment is underpinned by risk-adjusted capitalisation that is expected to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best views the company’s investment portfolio as conservative, and it comprises mainly cash, term deposits and high-quality bonds. In addition, capital adequacy remains supportive of MSFC’s planned business growth, supported by consistent internal capital generation over the years. An offsetting balance sheet strength factor is the company’s high reliance on reinsurance to support the underwriting of large limit risks and to manage accumulation of catastrophe exposure; although the reinsurance counterparty credit risk is partially mitigated by the good credit quality of the MSFC’s reinsurance panel and its long-standing relationship with the reinsurers.

The company has a track record of strong operating performance, with a five-year average combined ratio and return-on-equity ratio of 62.9% and 11.2%, respectively (2017-2021). Underwriting results are favourable, supported by the company’s strong underwriting discipline and in-depth expertise in core lines of business and markets. The company’s net underwriting margins have consistently benefitted from low management expenses and high reinsurance commission income relative to net earned premium.

MSFC’s business profile is assessed as neutral. The company is a dominant non-life insurer in Singapore, supported by its strong brand and technical expertise. MSFC’s underwriting portfolio is well-diversified by geography, with the company also underwriting a large volume of overseas business from a number of targeted markets in Asia. The company maintains long-standing relationships with brokers and reinsurers, which has supported its access to quality business in targeted markets. Additionally, MSFC also benefits from a growing level of business referrals from its parent group’s affiliates.

AM Best views the company’s ERM as appropriate, which is supported by its developed risk management framework and strong risk management capability. MSFC also continues to benefit from a level of risk management oversight, integration and support from its parent group.

Rating enhancement has been applied to MSFC’s ratings in recognition of its ownership, integration and the support received from MSI, a member of the MS&AD group. MSFC benefits from common branding with the MS&AD group and continues to receive implicit parental support in terms of corporate governance, business synergies and technological developments.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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