AM Best Affirms Credit Ratings of First Net Insurance Company
HONG KONG--(BUSINESS WIRE)--Nov 22, 2019--
AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” 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 categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
First Net’s strong balance sheet strength is supported by its conservative and liquid investment portfolio, financial flexibility owing to support from the Moylan family, as well as risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). With the exception of a one-off loss in fiscal-year 2014, the company has reported net operating profit consistently over the past decade, supported by positive underwriting and investment results. This has contributed to organic growth in the company’s capital and surplus through retained profits.
First Net is the ninth-largest property/casualty (P/C) insurer in Guam and faces intense competition with many P/C insurers competing in the country’s small and soft market. Nonetheless, the company enjoys an extensive distribution network and stable business sourced within its underwriting jurisdictions due to its affiliation with Moylan’s Insurance Underwriters, Inc. Given First Net’s small capital size and premium scale, it is exposed to expense pressure, especially upon expiration of its qualifying certificate, which afforded the company a tax exemption until April 2019. First Net also is vulnerable to potential volatility in underwriting results and risk-adjusted capitalization from large catastrophe events. It mitigates these risks through a conservative reinsurance strategy and a high quality reinsurer panel. However, this leads to a high dependency on reinsurance.
Positive rating actions could occur if First Net demonstrates sustained improvement in its operating performance – both in terms of size and margin of profit – for an extended period, contributing to surplus growth.
Negative rating actions could occur if there is significant deterioration in the company’s operating performance, or if there are material capital or dividend payouts that lead to a substantial decline in its risk-adjusted capitalization.
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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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CONTACT: Yizhou Hong
Senior Financial Analyst
+852 2827 3426
Associate Director, Analytics
+852 2827 3424
Manager, Public Relations
+1 908 439 2200, ext. 5159
Director, Public Relations
+1 908 439 2200, ext. 5644
KEYWORD: NORTH AMERICA UNITED STATES ASIA PACIFIC EUROPE HONG KONG
INDUSTRY KEYWORD: INSURANCE PROFESSIONAL SERVICES
SOURCE: AM Best
Copyright Business Wire 2019.
PUB: 11/22/2019 09:57 AM/DISC: 11/22/2019 09:57 AM