A.M. Best Affirms Ratings of Capital Life Insurance Company Limited

SINGAPORE--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating of B- (Fair) and the issuer credit rating of “bb-” of Capital Life Insurance Company Limited (CLI) (Papua New Guinea). The outlook for both ratings remains positive.

The ratings mainly reflect CLI’s sound risk-adjusted capitalization and strong operating performance. The positive outlook reflects expectations of sustained growth and overall profitability, driven primarily by the company’s group life and medical business.

On a risk-adjusted basis, CLI’s absolute capitalization is deemed adequate to support its current rating level, as evaluated by Best’s Capital Adequacy Ratio (BCAR). Profitable growth since 2012 has helped the company maintain its underwriting leverage at a prudent level. Hence, CLI’s overall capitalization is expected to remain supportive of its overall underwriting and asset risks.

As the operation continues to expand, the underwriting results are expected to continue benefiting from a more consistent claim experience and a lower expense ratio.

Partially offsetting these positive rating factors is the inherent concentration risk in CLI’s distribution strategy. CLI is reliant on a single international broker to generate a majority of its gross premium written. Additionally, given the company’s underdeveloped enterprise risk management strategy, A.M. Best considers there to be material risk associated with its rapid growth plans.

Upward rating movement could occur if CLI can continue to meet its financial objectives and planned profitability. However, a major operating loss or deterioration in the company’s risk-based capitalization could result in negative rating pressure. The ratings could also be impacted if the company’s business profile deteriorates significantly from the loss of a key distribution channel or an unfavorable change in the competitive landscape of the local life insurance market.

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.

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 © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20151204005710/en/

A.M. Best Company, Inc.
Larina Huang, +65-6589-8400, ext. 218
Associate Financial Analyst
[email protected]
or
Jason Shum, +65-6589-8400, ext. 217
Financial Analyst
[email protected]
or
Christopher Sharkey, +(1) 908-439-2200, ext. 5159
Manager, Public Relations
[email protected]
or
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Company, Inc.

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