HONG KONG, July 17 (Bernama-BUSINESS WIRE) -- A.M. Best
has placed under review with negative implications the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” of Century Insurance Company (Guam) Limited
(CIC Guam) (Guam).
These Credit Rating (rating) actions reflect the uncertainty surrounding the continuation of CIC Guam’s current book of business and distribution strategy due to the change in its exclusive managing general agent (MGA) agreement, which will be subject to further discussion over the remainder of 2017. This agency agreement was inaugurated in 2004.
CIC Guam’s risk-adjusted capitalization has improved and its operating performance remains positive. The company managed to increase its statutory capital and surplus position via retained earnings and an increase in admitted assets arising from improved overdue premium collection in 2016.
Offsetting rating factors include CIC Guam’s heavy reliance on its exclusive MGA for business and distribution support. CIC Guam also has generated an underwriting expense ratio over the past several years that is higher than that of its peers.
A.M. Best will continue to monitor closely the renewal status of CIC Guam’s MGA agreement and expects to resolve the under review with negative implications status following an assessment of the impact of the renewal status, and any contingency plans management will take should there be a material change in the company’s exclusive business distribution channel.
While positive rating actions are unlikely in the near term, negative rating actions could occur if CIC Guam’s risk-adjusted capitalization declines to a level that no longer supports its current ratings, or if there is significant deterioration in its business profile or operating performance due to the change in distribution strategy.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 rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com
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