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 (NEWGT). The outlook for the ratings is stable.
NEWGT is a wholly owned subsidiary and captive insurer of ITOCHU, one of Japan’s largest general trading companies.
The captive provides reinsurance protection against group-related risks across various regions, with the majority of NEWGT’s portfolio coming from ITOCHU-related marine business.
The remaining portfolio consists of a diverse mix of non-life business lines, including theft insurance, renters’ insurance, and group personal accident.
AM Best said NEWGT is well-integrated within the group with respect to risk management, corporate governance and internal control systems.
The captive has a moderate level of reinsurance dependency, though its exposure to potential credit risk is mitigated partially by a high-quality and well-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).
As of the fiscal year ended on 31 March 2024, NEWGT’s capital and surplus increased by 21% mainly from increased retained earnings, with no dividend upstream made during the period.
NEWGT’s operating performance has been consistently positive during the most recent five-year period.
For the fiscal year ended 31 March 2024, the gross premium and net premium earned from ITOCHU business remained relatively flat as its premium income became normalised from the strong growth in the previous year.
Its underwriting profit also showed improvement with favourable loss experience during the period.
AM Best expects that NEWGT’s operating performance will remain profitable over the intermediate term given the company’s prudent underwriting and reinsurance.
Negative rating actions could occur if NEWGT’s risk-adjusted capitalisation significantly deteriorates, such as from heightened underwriting risk or excessive dividend payouts.
AM Best said negative rating actions also could arise if there is significant deterioration in ITOCHU’s credit profile, including its operating profitability, financial leverage and interest coverage levels.
“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,” the ratings agency said.