Marble Reinsurance Corporation, the captive insurer of Marubeni Corporation, has had its financial strength rating of A- (Excellent) and its long-term issuer credit rating of “a” affirmed by A.M. Best.
The outlook for these ratings is stable.
The ratings are reflective of Marble Re’s balance sheet strength, categorised as “strong”, in addition to its strong operating performance, neutral business profile, and appropriate enterprise risk management.
The balance sheet assessment primarily mirrors the captive’s modest capital size, low underwriting leverage, and conservative investment portfolio.
The volume of risks that the Marble Re writes and retains means the capital is required to support its current book of business is relatively modest.
The captive’s underwriting results over the last five years have been consistently positive, contributing to an average combined ratio of under 60 percent.
The key operating metrics’ volatility has also been relatively stable, owing largely to a conservative reinsurance programme that helped to reduce volatility in its underwriting results.
In its role as a single-parent captive, the company only insures and reinsures the risks of affiliated and related companies within the Marubeni group, which is one of the largest trading companies in Japan.
The types of business written expose the Marble Re’s performance to high-severity, low-frequency losses, however, the captive has managed this risk through prudent underwriting guideline and a robust reinsurance programme with conservative retention levels and limits, including the presence of stop-loss covers for each line of business.
The ratings’ stable outlook are due to A.M. Best’s expectation that Marble Re’s operating performance will remain at a strong level, underpinned mainly by favourable claims experience and an expense ratio that should remain stable over time.
A material increase in risk appetite, which potentially undermines Marble Re’s profitability and capitalisation, and a significant deterioration in Marubeni’s credit profile could cause negative ratings to occur.
