A.M. Best Affirms Ratings of First Capital Insurance Ltd.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of "a-" of First Capital Insurance Ltd (First Capital) (Singapore). The outlook for both ratings is stable. The ratings reflect First Capital's improved capitalization, stable underwriting performance and liquid investment portfolio. First Capital's risk-adjusted capitalization, as demonstrated by both Best Capital's Adequacy Ratio (BCAR BCAR Brunswick County Association of Realtors BCAR British Civil Airworthiness Requirements BCAR Bullitt County Animal Rescue (Shepherdsville, KY) BCAR Business Case Analysis Report BCAR Beaver Creek Array BCAR Buffalo Civic Auto Ramps, Inc. ) and the local capital adequacy ratio Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. , improved in 2006. The local capital adequacy ratio increased to 334% in 2006 from 277% in 2005. The improvement was attributable to a strong capital growth of 25% and a lower investment risk due to disposal of unlisted equity. The company's underwriting income Underwriting income For an insurance company, the difference between the premiums earned and the costs of settling claims. increased to SGD SGD In currencies, this is the abbreviation for the Singapore 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. 18 million (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. 12 million) in 2006 from SGD 11 million (USD 7 million) in 2005 due to a stable loss ratio and improved expense ratio. The loss ratio was maintained at 53% in 2006, and the expense ratio improved to 6% in 2006 from 12% in 2005. First Capital has a liquid investment portfolio. As at December 31, 2006, the company invested 75% of its total invested assets in cash. The cash balance stood at approximately 90% of its current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. . An offsetting factor is the company's aggressive premium growth. First Capital's gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. and net premiums written increased by 130% and 78%, respectively, in 2006. The company's current level of risk-adjusted capital is adequate to support its forecasted business growth in the coming year. However, A.M. Best believes that any significant deviation from this forecasted growth will create pressure on First Capital's operation and capitalization unless First Capital implements appropriate countermeasures to mitigate or reduce such pressure on its operation and capitalization. For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com. |
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