AM Best Affirms Credit Ratings of MS First Capital Insurance Limited

SINGAPORE–(BUSINESS WIRE)–#insurance—AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of �a+” (Excellent) of MS First Capital Insurance Limited (MSFC) (Singapore). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect MSFC’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also factor rating enhancement from Mitsui Sumitomo Insurance Company Ltd (MSI), for which the ultimate parent is MS&AD Insurance Group Holdings, Inc. (MS&AD).

MSFC’s balance sheet strength assessment is underpinned by risk-adjusted capitalisation that remained comfortably at the strongest level in 2020, as measured by Best’s Capital Adequacy Ratio (BCAR). Capital adequacy continues to be supported by the company’s low net underwriting leverage and a conservative investment portfolio. In addition, strong retained earnings over the past five years have enabled the company to grow its shareholders’ equity to SGD 989 million in 2020 from SGD 578 million at the end of 2015. An offsetting balance sheet factor is the company’s high reliance on reinsurance to support the underwriting of large limit risks and to manage accumulation of catastrophe exposure; however, this is partly mitigated by the excellent credit quality of the MSFC’s reinsurance panel and its long-standing relationship with the reinsurers.

The company has a track record of strong operating performance and continues to outperform the industry benchmark, with a five-year average combined ratio and return-on-equity ratio of 68% and 12%, respectively (2016-2020). Excellent underwriting results are supported by the company’s strong underwriting discipline and in-depth expertise in core lines of business and markets. A low management expense ratio and favourable reinsurance commission income also have contributed substantially to the company’s technical results. While MSFC reported underwriting profits across the key lines of business in 2020, the company’s credit and surety portfolios were adversely impacted by the COVID-19 pandemic and consequential economic downturn.

MSFC’s business profile is assessed as neutral. The company is a dominant non-life insurer in Singapore, supported by its strong brand and technical expertise. Its underwriting portfolio is well-diversified by geography, with the company also underwriting a large volume of business from overseas and a number of targeted markets in Asia. The company maintains long-standing relationships with brokers and reinsurers, which has supported its access to quality business in targeted markets. Additionally, MSFC also benefits from a growing level of business referral from affiliates of its parent group.

AM Best views the company’s ERM as appropriate, which is supported by its developed risk management framework and strong risk management capability. MSFC also continues to benefit from a level of risk management oversight, integration and support from its parent group.

Rating enhancement has been applied to MSFC’s ratings in recognition of its ownership, integration and the support received from MSI, a member of the MS&AD group. MSFC benefits from common branding with the MS&AD group and continues to receive implicit parental support in terms of corporate governance, business synergies and technological developments.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Tran Nhat Trung
Senior Financial Analyst
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trung.tran@ambest.com

Myles Gould
Senior Director, Analytics
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Christopher Sharkey
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Jim Peavy
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