Evergreen’s Ratings Affirmed By Agency

December 23, 2011

A.M. Best Co. today [Dec. 23] affirmed the financial strength rating of A [Excellent] and issuer credit rating of “a” of Bermuda’s Evergreen Reinsurance Company, Ltd. [ERCL].

The ratings agency outlook for both ratings is stable.

Hamilton-based Evergreen Reinsurance Company Limited, a specialist in risk management and captive insurance management, is also one of the major stockholders of Central Reinsurance Corporation in Taiwan.

“The ratings reflect ERCL’s solid risk-adjusted capitalisation, consistently profitable operating performance and effective risk control under the risk management philosophy of its ultimate parent, Evergreen Group,” said A.M. Best analysts. “The ratings also recognise the strong commitment from the group to integrate ERCL as its core risk management unit that provides insurance and reinsurance coverage to the group and its operating subsidiaries.”

ERCL emanated its book of business predominately from the group’s marine and aviation businesses, while it also provides insurance protection on property, engineering, motor and casualty lines.

“Risk control measures are undertaken by the group’s internal risk control teams during the early stage of operations to partially mitigate the volatile nature of its portfolio,” said Best analysts. “In addition, ERCL consistently adheres to a conservative underwriting standard that maintained its net retained limits at a manageable level relative to its capital and surplus.

“Partially offsetting these rating factors is ERCL’s potential investment risk due to affiliated investments. ERCL’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, improved significantly subsequent to the full repayment of a loan by its affiliated company, EVA Airways Corporation in 2011, and the company does not maintain any affiliated investments at present. Nevertheless, ERCL demonstrated a track record of investing in affiliated companies over the past years. Any future material investments in affiliated companies –which will be tied to the future financial needs of its affiliated companies — will potentially pressure ERCL’s risk-based capitalization, given the relatively higher investment risk inherent in affiliated investments in general.”

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