A.M. Best Revises Issuer Credit Rating Outlook to Negative for The Oriental Insurance Company Limited
The revised Long-Term ICR outlook reflects the continued deterioration in Oriental’s underwriting performance. The company’s combined ratio has been unfavorable over the past five years, and the company also incurred a substantial reserve charge for the fiscal year ending
In terms of investment performance, Oriental’s equity portfolio continues to perform well, which mitigates some of the impact from the company’s underwriting losses.
Nonetheless, it is recognized that unrealized fair value gains from these equity investments form a considerable part of the company’s capital and surplus. Thus, the company’s capital and surplus could be volatile in times of stock market turbulence.
Overall, Oriental’s balance sheet strength remains very strong and is supported by solid risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s underwriting leverage is low compared with its major non-life insurer peers in
Further negative Credit Rating action could occur if no significant improvement in underwriting materializes or if there is material deterioration in Oriental’s risk-adjusted capitalization due to negative fair value movements. A revision of the Long-Term ICR outlook to stable could occur if the company can substantially improve and sustain its underwriting performance while maintaining its solid risk-adjusted capitalization.
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
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