A.M. Best Rating Services has assigned a ‘bb+’ rating and stable outlook on Custodian and Allied Insurance Limited, after an independent analysis of its operations.
According to AM Best, “the stable outlook reflects AM Best’s view that the balance sheet strength is expected to remain underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR).
“Over time, increasing capital requirements stemming from strong business growth are likely to be adequately supported by retained earnings, bolstered by the company’s robust underwriting profitability.”
With its strong liquidity, the rating agency pointed out that Custodian has moderate exposure to local equities and real estate, which account for approximately one-fifth of invested assets, even as it has high reliance on reinsurance, primarily for the oil and energy line of business.
On the operating performance of the insurer which the rating agency rated strong, it stressed that, it’s “good and improving overall earnings that significantly exceed inflation are underpinned by robust underwriting profitability and investment income, as operating performance is expected to remain strong over the medium term.”
With reference to the Enterprise Risk Management of the company, the report further stated that, “Internal risk management expertise has improved in recent years. There is an ongoing process of risk identification and monitoring through the use of specific risk management tools.
“An internal economic capital model has been developed and incorporated into the company’s strategic decision-making process. High economic, political and regulatory risk exposures are expected to remain a significant challenge for the company’s risk management.”
Meanwhile, AM Best, has said that with the recent US rejoining of Paris agreement, insurers, reinsurers are likely going to accelerate their environmental, social and governance efforts because there are signals that President Biden’s administration is going to take a tougher stance on environmental matters.
According to the global rating agency, outside the US, in Europe and Asia Pacific, in particular ,reinsurers have been increasing the integration of ESG factors into their investment and underwriting activities. It however, said there has been a perception that US reinsurers have lagged behind their global counterparts on this matte