A.M. Best has affirmed the financial strength rating (FSR) of A- (Excellent) and the long-term issuer credit rating (ICR) of “a-” of Marble Reinsurance Corporation (Marble Re), which is based in Micronesia.
The outlook of these credit ratings is stable.
A.M. Best categorised Marble Re’s balance sheet strength as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The company’s balance sheet strength also benefits from its low underwriting leverage and conservative investment portfolio.
Although A.M. Best also noted that the company has “relatively high reinsurance dependency”, the associated risk is mitigated by its well-diversified reinsurance panel that consists of reinsurers with good financial standing.
Marble Re’s balance sheet strength is underpinned by risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, at the strongest level.
The captive is wholly owned by the Marubeni Corporation, which is one of the largest trading companies in Japan. The company benefits from its parent’s broad business networks and trading activities and only insures and reinsures risks from affiliated and related companies within the Marubeni group.
A.M. Best highlighted: “As a single-parent captive, Marble Re is well-integrated within the group and benefits from the parent company’s overall ERM practices.”
The rating firm also outlined that the captive company has a track record of “favourable operating performance supported by a five-year average return-on-equity ratio of approximately 12 percent, driven mainly by stable investment income and very strong underwriting results”.
Although the captive experienced a contraction in premium income during fiscal-year 2019, underwriting results remained favourable with a five-year average combined ratio under 60 percent.
In addition, the company has limited potential volatility arising from its underwriting portfolio by using a conservative reinsurance programme.
A.M. Best suggested that negative rating actions could occur if there is a material increase in risk appetite, which could potentially undermine Marble Re’s profitability and capitalisation.
