Dtric Insurance Company, Reinsured Affiliate Outlooks Revised To Negative - AM Best

KUALA LUMPUR, June 10 (Bernama) -- AM Best has revised the outlooks for Honolulu-based DTRIC Insurance Company Limited (DTRIC) and its reinsured affiliate, DTRIC Insurance Underwriters Limited from stable to negative.

The global credit rating agency also affirmed the financial strength rating (FSR) of A- (Excellent) and the long-term issuer credit ratings of “a-” (Excellent) for both companies, according to a statement.

The credit ratings (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, which has an FSR of A+ (Superior).

The revised outlooks to negative from stable reflect a deteriorating trend of DTRIC’s capital base over recent years driven by unfavourable underwriting performance and corresponding decline in its risk-adjusted capitalisation, which was assessed at the strong level as of year-end 2023, as measured by Best’s Capital Adequacy Ratio.

While the upcoming capital injection from ADI within the next few months is expected to mitigate the current capital pressure partially, AM Best expects unfavourable underwriting results will continue to impact capital negatively in the medium term.

At the moment, limited visibility of the future business plan and capital strategy under the recently announced new business strategy also was considered in the revised outlooks.

DTRIC’s marginal operating performance assessment reflects the company’s overall profitability lagging the composite average, which was affected further by the losses from the Maui wildfires in 2023.

Despite its small size relative to the parent, DTRIC plays an important role in ADI’s global strategic plans as it also receives explicit support via reinsurance, a written parental financial guarantee agreement, and a track record of capital contributions including the upcoming capital injection.

-- BERNAMA