|[January 11, 2013]
A.M. Best Assigns Ratings to NEWGT Reinsurance Company, Ltd.
HONG KONG --(Business Wire)--
A.M. Best Asia-Pacific Limited has assigned a financial strength
rating of A- (Excellent) and issuer credit rating of "a-" to NEWGT
Reinsurance Company, Ltd. (NEWGT) (Bermuda). The outlook assigned to
both ratings is stable.
The ratings reflect NEWGT's stable operating profitability, aided by its
retrocession coverage in its general account and the implicit support
from the parent company, Itochu Corporation (Itochu). NEWGT was
incorporated in October 2005 as a wholly owned subsidiary of Itochu.
NEWGT is a Class 3 general business reinsurer and is registered under
the Segregated Accounts Company Act 2000 in Bermuda. NEWGT's business is
well diversified due to the broad range of trading business activities
conducted by Itochu, which is underwritten by the general account. Under
the segregated account, some risks have been underwritten, which are
well spread through personal accident and residential fire, with the
exception of the catastrophe business, which has been in run off since
NEWGT reported favorable operating performance in its general account
over the past five years, mainly driven by its major line of marine
cargo product, which is diversified globally. NEWGT's retrocession
coverage against its major product line helped it to stabilize its
underwriting results during the pst years. As a single parent captive,
NEWGT receives support from Itochu to grow in the captive market in the
form of capital injections, as well as support from its integrated risk
Partially offsetting these positive rating factors include NEWGT's
continuous expansion into the third party business, volatile operating
performance in the segregated account and the uncertain outlook of the
global economy. NEWGT will participate in Lloyd's Syndicates in
2013, which accounts for a significant proportion of its consolidated
net premium income in the forecast periods. Although Itochu will support
this new business by injecting capital, the increase in the third party
business could increase volatility in NEWGT's operating performance.
NEWGT reported a sharp increase in its loss ratio in the segregated
account in fiscal year 2010 as it has experienced several large claims
from the catastrophe business that has been in run off since 2012. The
uncertain economy outlook could impact NEWGT's operating performance, as
the sales of marine cargo are susceptible to trading activities.
Downward rating pressure could arise if there is a sharp decline in
NEWGT's risk-adjusted capitalization led by a deterioration in its
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Key criteria utilized include:
"Alternative Risk Transfer (ART)"; "Understanding Universal BCAR"; "Risk
Management and the Rating Process for Insurance Companies"; "Evaluating
Country Risk"; and "Catastrophe Analysis in A.M. Best Ratings." Best's
Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS
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