A.M. Best Affirms Ratings of Labuan Reinsurance -L- Ltd.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 B++ (Very Good) and the issuer credit rating of "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 (Labuan Re) (Malaysia). The outlook is stable. The rating reflects the company's improved 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. performance, solid capitalization, conservative investment strategy and strong liquidity portfolio. Labuan Re has achieved consistent improvement in underwriting performance over the past two years. The company recorded underwriting profits 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. 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. 5.5 million in fiscal year 2003, compared to 2002's loss of USD 9.5 million. The company has achieved the lowest combined ratio over the last five years, benefiting from the significant improvement in the loss ratio to 64% in fiscal year 2003 from 77% in fiscal year 2002. The company is securely capitalized with a low net premium leverage ratio. The local solvency margin, which stood at 615% at the end of fiscal year 2003, reflects Labuan Re's adequate solvency position. The Best's 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. , which measures capitalization on a risk-adjusted basis, further demonstrates solid financial strength of the company. Driven by its conservative investment strategy, Labuan Re maintained strong liquidity of its investment portfolio with 59% of the total assets invested in cash and 28% in fixed income securities as of June 2004. The operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. have been maintained at a good degree of financial flexibility with limited exposure to the equity market. Offsetting these positive factors are the weak profitability of the overseas portfolio, declining investment returns and comparatively small market size in the local market. Given the company's existing underwriting capacity, along with intensified competition against other domestic and foreign reinsurers in the overseas market, Labuan Re will continue to face challenges in achieving a high profit in the intense international reinsurance marketplace. The net investment yield declined to 1.7% in fiscal year 2003 from 3.1% in the previous year. With expectations that the increase in interest rates will be modest in the mid term, the continuously low investment return will exert extra pressure on Labuan Re's investment yield and the overall profit margin. 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 http://www.ambest.com/ratings. For current Best's Ratings, independent data and analysis on more than 330 reinsurance companies, please visit http://www.ambest.com/reinsurance/. 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 http://www.ambest.com. |
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