The rating affirmations reflect Starr China’s supportive risk-adjusted capitalization under a strengthened surplus position, and an improved operating expense ratio. In addition,
Over the past few years,
An offsetting rating factor is the challenge the company faces in achieving its business plan under China’s competitive market conditions. Moreover, the stop-loss reinsurance arrangement with SIRL was terminated in 2016. Another offsetting rating factor is the company’s increasing exposure to lower-frequency and potentially high-severity risks, located domestically and abroad, due to the change in portfolio mix to more commercial business, which may generate greater volatility in its underwriting results going forward.
While positive rating actions are not likely in the near term, negative rating actions could result from a continued and material adverse deviation from the company’s business plan, a significant decline in the risk-adjusted capitalization, or a reduced level of support provided by SIRL or SICO.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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Senior Financial Analyst
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