SINGAPORE, March 1 (Bernama-BUSINESS WIRE) -- A.M. Best has downgraded the Financial Strength Rating to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating to “bbb-” from “bbb” of Tugu Insurance Company Limited (TIC) (Hong Kong). The outlook of these Credit Ratings (ratings) is negative.
 
The ratings reflect TIC’s balance sheet strength, which A.M. Best categorizes as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).
 
The negative outlooks are based primarily on uncertainty regarding TIC’s capitalization. It also reflects the company’s low liquidity buffers.
 
TIC’s balance sheet strength is currently strong and supported by low underwriting leverage ratios. However, liquidity buffers are low and there is uncertainty over TIC’s future capitalization, as its parent intends to dispose of its ownership of TIC and repatriate major assets. While A.M. Best expects that TIC will be capitalized to satisfy regulatory requirements, no details are available to assess its risk-adjusted capitalization after the change in ownership.
 
TIC’s business profile is limited. The company has faced challenges in finding profitable sources of premium growth, which has led to combined ratios that have been above industry average in the five years to Dec. 31, 2017.
 
The company’s ERM is assessed as marginal. Liquidity and strategic risk are some areas in which the company’s risk management capability does not match its profile. Historically, reserving has been another area with ERM gaps. The company has no formal, company-wide risk management policy.
 
Positive rating movements are not anticipated at present.
 
Negative rating pressure could arise from a material decline in TIC’s risk-adjusted capitalization due to a significant decrease in its capital position. Unexpected volatility in its operating performance and a further decline in liquidity also could result in negative rating action.
 
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 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.
 
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
 
Contacts
A.M. Best
Chi Yeung Lok, +65 6303 5016
Director, Analytics
chi-yeung.lok@ambest.com
or
Christie Lee, +852 2827 3413
Director, Analytics
christi.lee@ambest.com
or
Christopher Sharkey, +1 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1 908-439-2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com

Source: A.M. Best
 
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http://www.businesswire.com/news/home/20180228006174/en

--BERNAMA