SINGAPORE, June 13 (Bernama-BUSINESS WIRE) -- A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of CBL Insurance Limited (CBL) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect CBL’s strong risk-adjusted capitalization, consistently profitable operating performance and low product risk profile.

CBL maintains strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). This is reflective mainly of its moderate underwriting leverage and favorable liquidity position. In addition, with a conservative gross leverage ratio, the company is not considered to be highly dependent on reinsurance.

Over the past five years, CBL’s underwriting performance remained very strong with an average combined ratio of approximately 80%, although net premium revenue increased at an average annual rate of over 30%. The favorable underwriting experience largely reflects the company’s growing access to a book of less volatile builders’ warranty business.

A major offsetting rating factor is CBL’s limited business profile, which remains somewhat geographically concentrated, as a large majority of its premium revenue is derived from Europe, primarily France. This exposes the company’s earnings to significant geographical concentration risk.

CBL’s ratings may be subject to negative rating pressure if the company’s capital erodes or its operating performance fails to meet projections due to weak underwriting fundamentals. Additionally, the ratings could be downgraded if there is material deterioration in the credit profile of its parent firm, CBL Corporation Limited.

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

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