First Net Insurance Company Credit Ratings affirmed - AM Best

KUALA LUMPUR, Nov 22 -- Global credit rating agency, AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of ‘bbb+’ (Good) of First Net Insurance Company (First Net) Guam. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect First Net’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

First Net’s risk-adjusted capitalisation is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and supported by its relatively low net underwriting leverage, and conservative and liquid investment portfolio, both of which partially offset its small absolute capital base.

Based on a statement, the company has a relatively high reliance on reinsurance for its business growth and catastrophe protection, albeit credit risk is limited due to a stable and high-quality reinsurer panel.

FirstNet’s adequate operating performance is underpinned by positive underwriting results and stable investment returns from its fixed-income portfolio. Its combined ratios mostly outperformed its composite’s average over the past 10 years, but the company’s small net premium base left its underwriting performance more susceptible to potential volatility arising from claims and expenses.

First Net reported favourable underwriting performance in 2020 and the first half of 2021 primarily due to reduced auto claims amid the COVID-19 pandemic. AM Best expects auto claims to rebound as traffic levels gradually return to normal over the coming years.

First Net is a domestic property and casualty insurer in the small and competitive Guam market, with a market share of approximately four per cent based on 2019 direct written premium (excluding group accident and health).

Given its location and geographic concentration, AM Best views the company’s business expansion opportunities as limited and highly dependent on local economic development. Nonetheless, the company has a stable business stream sourced through Moylan's Insurance Underwriters Inc, its affiliated company and a major multi-line insurance agency with a strong distribution network in Guam and nearby jurisdictions.

For more information, visit www.ambest.com.

-- BERNAMA