2013-02-22 20:00:39 -
A.M. Best Asia-Pacific Limited has assigned a financial strength rating of A- (Excellent) and issuer credit rating of “a-” to Marble Reinsurance Corporation (Marble Re) (Federated State of Micronesia).
The outlook assigned to both ratings is stable.
The ratings reflect Marble Re’s strong risk-adjusted capitalization, stable operating profitability, strong retrocession coverage and the support from the parent company, Marubeni Corporation.
As a single parent captive of Marubeni Corporation, Marble Re’s risk–adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, remains strong to support the assigned ratings. Marble Re’s absolute capitalization is expected to further increase primarily due to strong profitability and capital injection from the parent company of Marubeni in early 2013. Marble Re reported a combined ratio of an average
of 52% in the past five years, with a range from 49.7% to 57.4% as it focuses on marine cargo line risk. The new product portfolio generated from Marubeni Corporation’s group of companies, which reported a favorable track record in underwriting results, could support the operating profitability in the future. Marble Re maintains a conservative underwriting guidance with a limited retention and retrocession coverage of an aggregate stop loss cover against marine cargo line.
Partially offsetting rating factors include an implementation risk in Marble Re’s expansion plan as well as an uncertain outlook of the economy conditions. Although Marbubeni Corporation has a long history in operating captive businesses, the expansion of product lines would cause risk in its implementation. As Marble Re’s major product line is marine cargo, of which sales are susceptible to trading activities, weakening trading activities would lead to a sharp drop in premium income, and consequently, could impair its operating performance.
While upward movement on Marble Re’s ratings is unlikely, downward pressure could arise if there is a sharp decline in its risk-adjusted capitalization.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding Universal BCAR”; “Rating Members of Insurance Groups”; “Evaluating Country Risk”; “Catastrophe Analysis in A.M. Best Ratings”; and “Rating New Company Formations.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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