Bermuda-domiciled Evergreen Insurance Company Limited (EICL) has had its financial strength rating downgraded to “A-” (Excellent) and long-term issuer credit rating downgraded to “a-” (Excellent) by AM Best after the captive decided to cease underwriting new business.
EICL is the pure captive owned by Taiwanese shipping and transportation conglomerate Evergreen Group.
AM Best said the rating change reflected the captive’s business plan to cease underwriting new business starting from mid-May 2024.
“AM Best revised the company’s operating performance assessment to adequate from strong given that its top-line and bottom-line results are projected to drop materially in the next two years,” the ratings agency stated.
“Additionally, AM Best revised the company’s business profile assessment to limited from neutral due to the planned reduction in business scale.”
AM Best said the balance sheet strength of the captive remains “very strong”, and continues to be supported by Evergreen International S.A. and Evergreen International Corporation in terms of capital, business development, operations and risk management.
The captive’s portfolio primarily consists of marine, aviation and property risks related to the group’s operations.
“The company has ceded the majority of its risk exposures to a panel of financially sound reinsurers and maintained a low retention ratio,” AM Best added.
“EICL’s overall capital position and profitability have been stable over the past five years, owing to prudent underwriting practices, conservative reserving assumptions and long-term reinsurance relationships.”
EICL’s five-year average return-on-equity ratio was 12.2% (2019-2023).