A.M Best Affirms Rating of DTRIC Insurance Company Limited; Assigns Issuer Credit Rating.OLDWICK, N.J. -- A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength rating of A- (Excellent) and assigned an issuer credit rating of "a-" to DTRIC Insurance Company Limited (DTRIC) (Honolulu, HI). The outlook for both ratings is stable. The ratings reflect DTRIC's improvement in operating performance, its conservative investment strategy and lower catastrophic exposure. In addition, the rating also reflects the financial support DTRIC receives from its Japanese parent, Aioi Insurance Company Limited. Benefiting from the improvement in operating efficiency and the underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. margin, DTRIC recorded a combined ratio of 99.3% in fiscal year 2004. The company had a combined ratio of 106.9% in fiscal year 2002 and 101.6% in fiscal year 2003. The improvement in the underwriting margin was primarily due to a significant decrease in the workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. loss ratio, which declined from over 60% in fiscal year 2003 to below 30% in fiscal year 2004. The combined ratio further improved to 98.4% for the first nine months of 2005. DTRIC's investment portfolio is very conservative. The company invested over 60% of its total assets in fixed income securities with a focus on municipal bonds. In addition, DTRIC has a 7.5% guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. on equity investments. As of September 2005, the company owns 5% of its total assets in equity, which is well below the industry's average. DTRIC has run off all hurricane exposure on its homeowners' portfolio beginning with fiscal year 2004. Although the homeowners' portfolio accounted for less than 2% of the company's total net premium written, the run-off lowered the company's catastrophe exposure and reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. costs associated with the hurricanes. An offsetting factor is the anticipated increase in underwriting risk due to the expansion of the commercial lines of business. Personal lines accounted for over 70% of DTRIC's net premium written. Due to a softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. market in personal lines in Hawaii, DTRIC plans to expand its business to other commercial lines (general liability, commercial auto, package and property). Although the expansion plan will increase the underwriting risk, A.M. Best believes that it will also provide diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. and a growth opportunity for the company. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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