A.M. Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” of NEWGT Reinsurance Company.
The ratings reflect NEWGT’s balance sheet strength, which A.M. Best categorises as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
A.M. Best suggested that NEWGT’s strong balance sheet assessment reflects its modest capital base, low underwriting leverage and conservative investment portfolio.
The company’s recent initiative to strengthen reserves, which was partially in response to the adverse loss development from one of two cells in its segregated account during fiscal-year 2018, caters additional provision for its losses based on its conservative reserving approach.
Despite the increase in reserves, A.M. Best said the capital required to support its current book of business is still relatively modest, given the volume of risks that NEWGT currently underwrites and retains.
According to the rating company, operating performance continued to improve this year with a lower combined ratio, underpinned by an improvement in claims experience and a stable expense ratio.
Although revenue is expected to decrease slightly in the short term over the course of its portfolio enhancement, A.M. Best suggested the company’s underwriting results will remain profitable and gradually improve through the pursuit of growth in group-related business.
As a single-parent captive, NEWGT mainly insures and reinsures risks from affiliated and related companies of ITOCHU Corporation, a Japanese trading company.
NEWGT also maintains a segregated account that writes third-party lines of businesses.
A.M. Best said: “The current book of business consists of risks that may expose the company to high-severity and low-frequency losses. However, the company has managed these risks through prudent underwriting guidelines and an appropriate reinsurance programme.”
