A.M. Best Assigns Ratings to Tenet Insurance Company Ltd.

OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and an issuer credit rating (ICR) of "a-" to Tenet Insurance Company Ltd (Tenet) (Singapore). The outlook on both ratings is stable.

The ratings reflect the company's sound capitalization level, conservative and liquid investments and positive trend in underwriting performance.

Tenet's sound capitalization is demonstrated by its conservative local capital adequacy ratio and net underwriting leverage, which stood at 317% and 0.3 times, respectively, at year end 2005. According to the company's expectation for premium growth, Tenet's financial strength will remain solid during the next three years.

Tenet has maintained a liquid and conservative asset portfolio, over 65% of which consists of cash and bonds. In addition, over 50% of its bond portfolio consists of short-term bonds with maturities of less than one year, which provides strong liquidity for the company. Most of the issuers of the bonds are either government linked companies or are companies listed in Singapore.

Tenet used to focus on the motor line of business which recorded a high loss ratio of 96% in 2002. After 2002 the company shifted its business focus to non-motor lines of business--in particular personal accident and travel accident insurance--which has generally resulted in a low loss ratio. The net claim paid ratio, therefore, improved to 49% in 2005 from 111% in 2001. Benefiting from the stable investment income and improvement in underwriting, the company was able to achieve an operating ratio below 100% in the past five years except in 2002.

Offsetting factors include Tenet's lack of premium growth, relatively high expense ratio and weak underwriting performance.

In spite of making good progress in the personal accident and travel accident lines of business, the company's gross premiums written still recorded a decrease of 3% in 2005 largely due to the decline in private car motor premiums. A.M. Best remains cautious about the company's ability to generate significant premium growth in coming years given the intense competition in Singapore's insurance market.

Tenet's expense ratio has been above 50% for the past five years except in 2002, which is considered high compared to its peers in Singapore. The high expense ratio was mainly due to the relatively high fixed costs and low premium volume. It would be a challenge for the company to lower its expense ratio.

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.