AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of NEWGT Reinsurance Company (NEWGT) (Bermuda).
The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect NEWGT’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The balance sheet strength is well-supported by NEWGT’s risk-adjusted capitalisation, which is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR).
The company’s balance sheet strength also is underpinned by its favourable balance sheet liquidity and healthy capital structure. Although the company has moderate reliance on reinsurance, this risk is mitigated by its high quality and well-diversified reinsurance panel, finds AM Best.
For the fiscal year ended 31 March 2022, NEWGT’s underwriting profit from its general account improved to JPY 226 million from JPY 45 million as a result of business recovery from the COVID-19 pandemic and higher commodity prices.
NEWGT continued to report low but stable investment returns with its conservative investment strategy.
Prospectively, AM Best expects the company’s overall operating performance will remain profitable with its premium income to continue to benefit from the recovery of its parent company’s trading business and its combined ratio to remain stable.
NEWGT is a wholly owned subsidiary of Itochu Corporation, one of Japan’s largest general trading companies listed on the Tokyo Stock Exchange (Itochu).
Negative rating actions could occur if there are substantial underwriting losses caused by a material shift in its risk appetite.
Negative rating actions also could arise if there is significant deterioration in Itochu’s credit profile, including its operating profitability, financial leverage and interest coverage levels.
