AM Best has affirmed the financial strength rating of A- (excellent) and the long-term issuer credit rating of “a-” (excellent) of Bermuda-domiciled NEWGT Reinsurance Company. The outlook for the ratings is stable.
NEWGT is the wholly owned captive owned by ITOCHU Corporation, one of Japan’s largest general trading companies.
The captive provides reinsurance protection against group-related risks across various regions.
A majority of NEWGT’s business comes from ITOCHU-related marine business, while the remaining portfolio consists of a diverse mix of non-life business lines, including theft, renters, and group personal accident.
Notwithstanding the volatility in the major lines of marine cargo due to the impact of commodity price fluctuations, AM Best expects that NEWGT’s operating performance will remain profitable over the intermediate term.
AM Best said NEWGT is well-integrated within the group with respect to risk management, corporate governance and internal control systems.
The company has a “moderate level” of reinsurance dependency, but its exposure to potential credit risk is partially mitigated by a diversified reinsurance panel.
The ratings reflect NEWGT’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
NEWGT’s balance sheet strength is well-supported by its risk-adjusted capitalisation, which is assessed at the strongest level, as measured by Best’s capital adequacy ratio (BCAR).
The company’s capital base is expected to remain sufficient to support its underwriting portfolio over the medium term.
NEWGT’s operating performance has been consistently positive during the most recent five-year period.
For the fiscal year ended 31 March 2023, the company recorded notable growth in both premium income and net profit.
AM Best said negative rating actions could occur if NEWGT’s risk-adjusted capitalisation deteriorates, such as from heightened underwriting risk or an excessive dividend pay-out to its parent.
“Negative rating actions could also arise if there is significant deterioration in ITOCHU’s credit profile, including its operating profitability, financial leverage and interest coverage levels,” AM Best said.
“Positive rating actions could occur if NEWGT demonstrates sustained and notable improvement in its underwriting and operating profitability for a period of time, while maintaining a robust level of risk-adjusted capitalisation.”