A.M. Best Revises Rating Outlook to Positive for Central Reinsurance Corporation.OLDWICK, N.J. -- A.M. Best Co. has revised the rating outlook to positive from stable for Central 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. Corporation (Central Re) (Taiwan). At the same time, A.M. Best has affirmed Central Re's financial strength rating of A- (Excellent) and issuer credit rating (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "a-". The ratings reflect Central Re's strengthened risk-based capitalization, continuous improvement in risk management and stable operating performance. The ratings also recognize the company's continued efforts in strengthening its overseas market presence in recent years. Central Re's net premium leverage ratio (net premium written over adjusted capital and surplus) improved to 1.08 times due to higher retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. and an increase in equalization reserve in 2007. The company's adjusted capital and surplus (including equalization reserve) increased to TWD TWD In currencies, this is the abbreviation for the Taiwan 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. 12,055 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. 370 million) as at year-end 2007. In A.M. Best's view, the company's risk-adjusted capitalization is sufficient to support its current ratings as demonstrated by 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. (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. ). Central Re launched its enterprise risk management (ERM (Enterprise Relationship Management) An umbrella term with many shades of meaning over the years. It may refer to the management of information from any or all of an organization's customers, suppliers, business partners and employees. ) program in 2004. A.M. Best noted that Central Re has incorporated the results of its risk management model in its strategic decision-making process. A.M. Best believes that a sound risk management program would help the company to better manage its risk exposure, leading to higher efficiency in capital management. Central Re has maintained profitable and stable underwriting results with a combined ratio falling within the 90%-97% level in the past five years. Given that Taiwan is a catastrophe-prone country, Central Re's stable and consistent operating performance has demonstrated its prudent underwriting control and risk management practice. Offsetting factors are the competitive market condition and limited reinsurance business growth in Taiwan. Central Re has expanded its business to overseas reinsurance markets in recent years. Given the competitive environment in the reinsurance market in Asia, A.M. Best believes that it will be a challenge for Central Re to develop its market presence with meaningful scale and profitability in overseas markets. Nonetheless, A.M. Best will continue to monitor the progress of the company's overseas expansion plan. Central Re focused mainly on the domestic reinsurance market, with 94.6% and 93.5% of its 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. generated from Taiwan in 2006 and 2007, respectively. Due to the market consolidation and higher premium retention in Taiwan's direct insurance market, the size of the reinsurance market in Taiwan has been shrinking in the past four years. Central Re's business growth is limited by the domestic reinsurance market. 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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