HONG KONG--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of First Net Insurance Company (First Net) (Guam). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect First Net’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
First Net’s risk-adjusted capitalisation is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and supported by its relatively low net underwriting leverage, and conservative and liquid investment portfolio, both of which partially offset its small absolute capital base. The company has a relatively high reliance on reinsurance for its business growth and catastrophe protection, albeit credit risk is limited due to a stable and high-quality reinsurer panel.
FirstNet’s adequate operating performance is underpinned by positive underwriting results and stable investment returns from its fixed-income portfolio. Its combined ratios mostly outperformed its composite’s average over the past 10 years, but the company’s small net premium base left its underwriting performance more susceptible to potential volatility arising from claims and expenses. The company has faced an additional expense burden since April 2019 when its tax-exempt qualifying certificate expired; however, this was...
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