AM Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent) of Bermuda-based NEWGT Reinsurance Company.
NEWGT is a captive insurer and wholly-owned subsidiary of ITOCHU, a Japanese general trading company. The captive provides reinsurance protection against group-related risks.
The outlook of these credit ratings is stable.
The ratings reflect the reinsurance captive’s balance sheet strength, which AM Best assesses as “strong”. This is in addition to adequate operating performance, a neutral business profile and appropriate enterprise risk management.
NEWGT’s balance sheet strength is well-supported by its risk-adjusted capitalisation, which is assessed at the strongest level, as measured by AM Best’s capital adequacy ratio.
The ratings company expects the firm’s capital base to remain sufficient to support its underwriting portfolio over the medium term. Although, it notes, this is reduced following a sizable dividend upstream to ITOCHU, its parent, in the fiscal year which ended 31 March.
NEWGT’s operating performance has been consistently positive during the most recent five-year period. For the fiscal year, the company recorded notable growth in both premium income and net profit. This was a result of a strong performance in ITOCHU's trading business, which was attributable to higher commodity prices and foreign exchange benefits from the depreciation of the Japanese yen during that period.
The majority of NEWGT’s business comes from ITOCHU-related marine business and the remaining portfolio consists of a diverse mix of non-life business lines. These include theft insurance, renters’ insurance, and group personal accident.
NEWGT is well-integrated within the group with respect to risk management, corporate governance and internal control systems.
Despite moderate volatility in the major lines of marine cargo business due to the impact of commodity price fluctuations, AM Best says it expects that NEWGT’s operating performance will remain profitable over the intermediate term. This is given the company’s prudent underwriting practices and reinsurance programmes.
