AM Best has removed from under review with positive implications and upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to 'a' (Excellent) from 'a-' (Excellent) of
The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings of CMBWLI were placed under review with positive implications in
In addition, CMIH entered into a share subscription agreement with CMBWLI on
The ratings reflect CMBWLI's balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The rating upgrades also reflect improvement in CMBWLI's ERM framework. The company has continued to strengthen its risk management over the last few years, including investment risk controls, risk identification and monitoring tools and risk governance. For example, the company refined its investment policy to mitigate undue investment and concentration risks in bond and equity investments. CMBWLI also demonstrates strong underwriting know-how and effective management of underwriting risk, as evidenced by consistently favourable underwriting results. Going forward, following the completion of the transactions, AM Best views CMBWLI's ERM program as benefiting from additional risk management resources, best practices and risk oversight from the company that will become its new ultimate parent, CMG.
CMBWLI's very strong balance sheet strength assessment is underpinned by its robust risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR). The company's capital base continued to grow organically in 2021, supported by its positive operating results and full profit retention. During 2022, cash and cash equivalents remained as the company's largest asset type, while there was a significant decrease in real estate due to a one-off dividend in specie to
CMBWLI's overall operating performance has been consistently strong and better than average. Its five-year average return on equity was 7.6% (2017-2021). Net earnings remained favourable in 2022, supported by decent growth in premium volume and an outstanding underwriting result, particularly from the general liabilities business. CMBWLI's investment performance continues to be supported by a stream of interest, dividend and rental incomes. However, this was partially offset by some capital losses since third-quarter 2021.
CMBWLI is a medium-size, non-life insurer in
Further positive rating actions are unlikely over the short to intermediate term. Negative rating actions could occur if the company's operating performance deteriorates materially due to adverse underwriting results or investment losses, or adverse deviation in executing the business plan following the business transferal transaction. Negative rating actions also could arise if there is significant deterioration in the company's risk-adjusted capitalisation, for example, due to material investment losses or any change or delay in capital injections by the company that will become its new intermediate parent, CMIH.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.
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