A.M. Best Affirms Rating of Labuan Reinsurance (L) Ltd and Upgrades Issuer Credit Rating; Revises Outlook to Positive.OLDWICK, N.J., U.S.A. -- A.M. Best Co. has affirmed the financial strength rating of B++ (Very Good) and upgraded the issuer credit rating to "bbb+" from "bbb" of Labuan 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. (L) Ltd (Malaysia). The outlook for both ratings has been revised to positive from stable. The rating reflects the company's excellent capitalization, stable underwriting performance and well balanced portfolio with diversified geographic risk Geographic risk Risk that arises when an issuer issues policies concentrated within certain geographic areas, such as the risk of damage from a hurricane or an earthquake. . The strong commitment by its shareholders serves as an additional buffer to its current capitalization. Labuan Re's shareholders have consistently supported the company by increasing the paid-up capital Paid-Up Capital The total amount of shareholder capital that has been paid in full by shareholders. Notes: Paid-up capital is essentially the portion of authorized stock that the company has issued and received payment for. since its inception in 1992. The company had initial paid-up capital of USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 10 million, which was substantially increased to USD 150 million in later years. In addition, Labuan Re's shareholders have committed an additional USD 50 million in capital should the company need to increase its capitalization. Labuan Re achieved a stable underwriting result over the past two years. The company recorded an underwriting profit Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums. and net income of USD 5 million and USD 14 million, respectively, in fiscal year 2003. Benefiting from the improvement in investment income, Labuan Re's net income increased to USD 16 million, although the underwriting profit decreased to USD 3 million in fiscal year 2004. A.M. Best believes that this income level is sustainable, although the company experiences catastrophe losses. For fiscal year 2005, Labuan Re expects slightly lower net income compared to the previous year due to losses sustained from Hurricane Katrina  Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. in the United States. As of fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. 2004, the company's business portfolio included 29% in Malaysia, 45% in Lloyd's and the remaining 26% in other overseas markets such as the Middle East and Asia. The participation in Lloyd's increased international diversification International diversification The attempt to reduce risk by investing in more than one nation. By diversifying across nations whose economic cycles are not perfectly correlated, investors can typically reduce the variability of their returns. of Labuan Re's underwriting portfolio, and the exposure to Europe and North America in the Lloyd's portfolio provides diversification to the company's primarily Asian risk exposure. Offsetting factors include catastrophe exposure in overseas markets and expected decrease in risk-based capitalization due to continued premium growth. As Labuan Re intends to further increase premium volume, risk-based capitalization will face downward pressure. A.M. Best will closely monitor the premium growth and capitalization going forward. For Best's Ratings, 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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