A.M. Best Affirms Credit Ratings of Ansvar Insurance Limited

20-Apr-2018 Intellasia | BusinessWire | 11:44 PM Print This Post

HONG KONG–(BUSINESS WIRE)–A.M. Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-” of Ansvar
Insurance Limited
(Ansvar) (Australia). The outlook of these Credit
Ratings (ratings) is stable.

The ratings reflect Ansvar’s balance sheet strength, which A.M. Best
categorizes as very strong, as well as its adequate operating
performance, neutral business profile and appropriate enterprise risk
management.

The balance sheet strength assessment mainly reflects Ansvar’s low
business net retention and moderate underwriting leverage. In addition,
while the company’s investment portfolio continues to be invested in
cash and high-grade fixed-interest securities, the average duration of
its bond portfolio and net claims liabilities is very well-matched.
Given Ansvar’s modest capital size, its exposure to property/casualty
risks that carry relatively high policy limits represents a major risk
factor. Nevertheless, this risk is mitigated partially by an appropriate
reinsurance program that has very conservative levels of retention
limits.

In response to poor underwriting results from 2010 to 2012, Ansvar
exited its unprofitable personal lines business and implemented various
measures to remediate the performance of its commercial book. Despite a
reduced revenue base following these remedial actions, the company has
consistently generated operating profits over the past five years,
driven mainly by a steady stream of investment income and a stable net
claims ratio of approximately 50%. Similar to a number of its peers, the
company’s high expense ratio has been the major overhang on operating
performance. Nevertheless, A.M. Best believes that, as Ansvar continues
to focus on strong customer retention and pursues profitable growth of
its niche businesses, its operating results will remain positive and
gradually improve over time.

Ansvar is a niche insurer that underwrites general insurance products
for its target customer groups in Australia, which includes faith,
community service organizations, care, education, and property owners
including heritage. Its core product offerings are property insurance,
liability insurance (including financial lines insurance) and accident
covers. While Ansvar has a long-established presence in some niche
segments, A.M. Best believes this advantage is offset somewhat by the
company’s limited control over distribution and a reliance on the
non-affiliated broker channel to distribute its products.

Given its status as a stable operator within a niche segment, Ansvar’s
risk profile shows high business concentration risk. Nevertheless, A.M.
Best considers Ansvar’s risk management capabilities to be aligned
appropriately with its risk profile. This is underpinned by the
company’s strict underwriting controls, prudent reserving and low
business retention, as well as by various strategic initiatives to
develop new business opportunities within its target customer groups.

The stable outlooks reflect A.M. Best’s expectation that Ansvar will
maintain positive operating results, supported by stable revenue growth,
steady claims ratios and an expense ratio that is expected to decline
gradually over time. Negative rating actions could occur if Ansvar fails
to meet its profitability targets due to competitive pressures, or if
there are material adverse deviations from the budgeted loss and expense
ratios.

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
Jason Shum, +65 6303 5020
Associate
Director, Analytics

[email protected]
or
Chi-Yeung
Lok, +65 6303 5016

Director, Analytics
[email protected]
or
Christopher
Sharkey, +1 908-439-2200, ext. 5159

Manager, Public Relations
[email protected]
or
Jim
Peavy, +1 908-439-2200, ext. 5644

Director, Public Relations
[email protected]

 


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