Best’s News & Research Service - June 11, 2021 10:26 AM (EDT)
AM Best Affirms Credit Ratings of DTRIC Insurance Company, Limited and DTRIC Insurance Underwriters, Limited
- June 11, 2021 10:26 AM (EDT)
Hong Kong //BestWire// - AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” (Excellent) of DTRIC Insurance Company, Limited (DTRIC), and its reinsured affiliate, DTRIC Insurance Underwriters, Limited. The outlook of these Credit Ratings (ratings) is stable. Both companies are domiciled in Honolulu, HI.
The ratings reflect DTRIC’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management. The ratings also consider the impact of implicit and explicit support given to DTRIC by Aioi Nissay Dowa Insurance Company Limited (ADI), a member of MS&AD Insurance Group Holdings, Inc. ADI has an FSR of A+ (Superior) and is classified under the Financial Size Category of XV ($2 billion or greater).
AM Best’s assessment of DTRIC’s balance sheet strength as strong is attributed to its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). Also reflected in the company’s balance sheet strength assessment is DTRIC’s high quality of capital, strong liquidity and good quality reinsurance panel.
In terms of operating performance, the company recorded a significant increase in underwriting income in fiscal year 2020 (FY2020), attributable to the positive impact of COVID-19 on its current year claim experience and reserves release, all of which resulted in a lower combined ratio of 92.1%. Despite the one-off positive impact on its net income, the company’s written premium growth was under pressure in FY2020 and is likely to be negatively impacted by COVID-19 in FY2021. The company’s recent IT system upgrade is also likely to weigh on the company’s underwriting expenses and performance over the next few years.
DTRIC mainly specialises in underwriting personal automobile insurance, workers’ compensation and a number of other commercial line products in Hawaii, where the company holds an overall market share of less than 3%. Although there is no significant concentration in its product mix, its narrow geographic focus is a major factor that has constrained DTRIC’s business profile assessment. AM Best also notes that there was a recent change in senior leadership within the company, which is expected to facilitate ADI’s expansion initiatives in Hawaii.
The stable outlooks reflect AM Best’s expectation that DTRIC will maintain its overall balance sheet strength assessment at least at a strong level. AM Best also expects that ongoing strategic initiatives implemented by management will help DTRIC maintain positive operating performance over the short to medium term.
Negative rating actions could occur if there is material deterioration in risk-adjusted capitalisation caused by large-scale natural catastrophes or if its profitability falls below AM Best’s expectations due to competitive pressure, adverse claims experience or overrun expenses. Negative rating actions could also occur if there is significant reduction of support from ADI or significant deterioration in ADI’s credit profile, including its risk-adjusted capitalisation, financial leverage or interest coverage levels.
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 Guide to 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 credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.