A.M. Best Downgrades Credit Ratings of CBL Corporation Limited and CBL Insurance Limited; Places Under Review With Negative Implications

SINGAPORE--(BUSINESS WIRE)-- A.M. Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bb+” from “bbb-” of CBL Corporation Limited (CCL) (New Zealand). Concurrently, A.M. Best also has downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term ICR to “bbb+” from “a-” of CBL Insurance Limited (CBL) (New Zealand). These Credit Ratings (ratings) have been placed under review with negative implications.

CCL is a listed company on the Australian Securities Exchange and the New Zealand Stock Exchange. The lead insurance subsidiary within this group is CBL, a non-life insurer that specializes in underwriting building- and construction-related credit and financial surety insurance, bonding and reinsurance.

The rating downgrades reflect the significant deterioration in CCL’s operating performance in fiscal year 2017, due primarily to a NZD 100 million reserve charge to strengthen reserves for CBL’s long-tail French construction insurance business. Management has proposed raising a substantial amount of capital, with details anticipated to be announced over the upcoming weeks, and this is expected to restore overall balance sheet strength to a level that supports the current ratings. In addition, A.M. Best will have further discussions with the company regarding its reserving practice, as well as the long-term profitability of CBL’s long-tail insurance products.

A review of the full-year 2017 results, including the associated actuarial and reserving analysis, is necessary to provide A.M. Best with sufficient information to resolve these questions.

These ratings will remain under review pending the completion of the intended capital raise, an assessment of the adequacy of the strengthened reserves, as well as the corrective actions taken by the management to address the underlying causes of the shortfall in claims reserves.

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 A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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Source: A.M. Best