Category: Financial Strength

PRESS RELEASE FROM A.M. BEST

SINGAPORE–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Ansvar Insurance Limited (Ansvar) (Australia). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Ansvar’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Ansvar’s balance sheet strength is underpinned by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), reflecting a low level of retained underwriting risk. In addition, the company’s investment portfolio is conservative, being invested in cash and high-grade, fixed-interest securities. Offsetting factors in the balance sheet strength assessment include Ansvar’s modest capital base relative to the high gross policy limits on its property risks, as well as its high reinsurance dependence.

The company’s operating performance is adequate, demonstrated by a five-year average (2014-2018) return on equity of 5.1%. The combined ratio over the same period was 105.2%, due in part to the impact of natural catastrophes. However, results have improved following active restructuring of the underwriting portfolio, and technical profits have been reported in each of the past two years. Over the medium term, AM Best expects the combined ratio to remain below 100%, in line with 2017 and 2018, and exhibit a lower level of volatility.

Ansvar is a small niche insurer that underwrites general insurance products for its target customer groups in Australia (including faith-based, community service organizations, care, education, and property owners including heritage properties). Its core product offerings are property insurance, which is heavily reinsured, liability insurance (including financial lines insurance), and accident cover. Ansvar has a long-established presence in some niche segments. However, AM Best believes this advantage is offset somewhat by the company’s limited control over distribution, due to its reliance on the non-affiliated broker channel, as well as the strong competition for targeted business. AM Best is closely monitoring the company’s ability to translate its position in its niche markets into profitable underwriting results, and deterioration in performance could lead to negative rating actions.

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 AM 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 AM 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 AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

PRESS RELEASE FROM A.M. BEST

HONG KONG – APRIL 20, 2018
A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Ansvar Insurance Limited (Ansvar) (Australia). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Ansvar’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The balance sheet strength assessment mainly reflects Ansvar’s low business net retention and moderate underwriting leverage. In addition, while the company’s investment portfolio continues to be invested in cash and high-grade fixed-interest securities, the average duration of its bond portfolio and net claims liabilities is very well-matched. Given Ansvar’s modest capital size, its exposure to property/casualty risks that carry relatively high policy limits represents a major risk factor. Nevertheless, this risk is mitigated partially by an appropriate reinsurance program that has very conservative levels of retention limits.

In response to poor underwriting results from 2010 to 2012, Ansvar exited its unprofitable personal lines business and implemented various measures to remediate the performance of its commercial book. Despite a reduced revenue base following these remedial actions, the company has consistently generated operating profits over the past five years, driven mainly by a steady stream of investment income and a stable net claims ratio of approximately 50%. Similar to a number of its peers, the company’s high expense ratio has been the major overhang on operating performance. Nevertheless, A.M. Best believes that, as Ansvar continues to focus on strong customer retention and pursues profitable growth of its niche businesses, its operating results will remain positive and gradually improve over time.

Ansvar is a niche insurer that underwrites general insurance products for its target customer groups in Australia, which includes faith, community service organizations, care, education, and property owners including heritage. Its core product offerings are property insurance, liability insurance (including financial lines insurance) and accident covers. While Ansvar has a long-established presence in some niche segments, A.M. Best believes this advantage is offset somewhat by the company’s limited control over distribution and a reliance on the non-affiliated broker channel to distribute its products.

Given its status as a stable operator within a niche segment, Ansvar’s risk profile shows high business concentration risk. Nevertheless, A.M. Best considers Ansvar’s risk management capabilities to be aligned appropriately with its risk profile. This is underpinned by the company’s strict underwriting controls, prudent reserving and low business retention, as well as by various strategic initiatives to develop new business opportunities within its target customer groups.

The stable outlooks reflect A.M. Best’s expectation that Ansvar will maintain positive operating results, supported by stable revenue growth, steady claims ratios and an expense ratio that is expected to decline gradually over time. Negative rating actions could occur if Ansvar fails to meet its profitability targets due to competitive pressures, or if there are material adverse deviations from the budgeted loss and expense ratios.

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.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.

A.M Best Asia-Pacific Limited this month awarded Ansvar Insurance, Australia’s leading insurance provider for the Community, Care, Education, Faith and Heritage segments, with a financial strength rating of A- (Excellent) and issuer credit rating of a-.  The insurance rating agency recognises the outlook for both ratings is stable.

“We have been faced with a number of challenges over the past few years and the ratings reflect the measures we have taken to de-risk our balance sheets, reduce the costs of our reinsurance programs and support our risk-adjusted capitalisation,” said Andrew Moon, CEO, Ansvar.

Ansvar Australia has recently overhauled the business, moving towards a broker-only model, and this process of being a wholly intermediated insurer is almost complete.

“Given the redirection of Ansvar, the ratings come as timely confirmation that we are on the right track in terms of continually improving our services. It also shows the refinement of our portfolio which has taken place over the past 12 – 18 months has been a success,” said Andrew.

“Brokers have been very supportive of the direction we’re headed in.  As a smaller insurer, we are able to be agile and provide exemplary service in a way that larger competitors cannot easily replicate,” said Andrew.