Press Release - JANUARY 26, 2018
A.M. Best Revises Outlooks to Stable for ERGO Insurance Pte. Ltd.
FOR IMMEDIATE RELEASE
SINGAPORE - JANUARY 26, 2018
The affirmation of these Credit Ratings (ratings) reflects ERGO Insurance’s balance sheet strength, which A.M. Best categorizes as strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management. The revised outlooks recognize ERGO Insurance’s role in supporting its parent, ERGO Group AG, with its business development plans in Asia, as well as the explicit support ERGO Insurance receives from its ultimate parent company, Munich Reinsurance Company.
ERGO Insurance’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains solid and continues to support a balance sheet strength assessment of strong, despite a downward trend since 2014. Significant capital repatriation in the form of high dividend payments has reduced the company’s capital and liquidity position. A.M. Best expects ERGO Insurance’s risk-adjusted capitalization to remain strong in the near term, supported by reduced premium volumes.
ERGO Insurance’s operating performance continues to be unfavorable as a result of elevated losses and expense ratios, and its performance has fallen behind its peers since 2016. A new management team has been tasked with returning the company to profitability in the medium term.
Positive rating actions could occur if ERGO Insurance achieves consistent, above-industry average profitability while meeting its growth targets. Negative rating actions may occur in the event of further deterioration in the company’s operating performance or business profile. An unfavorable reassessment of ERGO Insurance’s strategic role in the group also could result in 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 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.
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