AM Best Affirms Singapore Reinsurance's Ratings as Excellent

KUALA LUMPUR, Dec 10 (Bernama) -- Global credit rating agency, AM Best has affirmed the financial strength rating of A (excellent) and the long-term issuer credit rating of “a” (excellent) of Singapore Reinsurance Corporation Limited (Singapore Re).

In a statement, AM Best said these credit ratings (ratings) have a stable outlook, which reflected Singapore Re’s balance sheet strength, was assessed as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

Additionally, the ratings factor in rating enhancement from the company’s ultimate parent, Fairfax Financial Holdings Limited (Fairfax). Singapore Re’s balance sheet strength is underpinned by risk-adjusted capitalisation that is expected to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio.

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The company’s investment portfolio is focused on cash, deposits and fixed-income securities, albeit with some exposure to higher-risk asset classes such as equities. Singapore Re strategically utilises retrocession to increase its underwriting capacity and manage exposure to catastrophe accumulations and large single risks.

The credit quality of the retrocession panel remains excellent, with the majority of reinsurance recoverables held with highly rated counterparties, in addition to benefitting from good financial flexibility due to the support provided by Fairfax.

Singapore Re is a modest-sized non-life reinsurer based in Singapore, writing treaty and facultative business mainly in Asia and the Middle East, with Singapore and India being the company’s two largest markets, based on 2023 gross premium written.

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A partially offsetting factor is the company’s elevated cedant concentration risk; however, this risk is partly mitigated by the fact that some of its largest cedants are companies within the Fairfax group or affiliates and others that have long-standing relationships.

Despite Singapore Re’s operations accounting for a small component of Fairfax’s consolidated revenue and earnings, the company is considered strategically important to the group’s international expansion strategy and provides access to local and regional business.

-- BERNAMA