KUALA LUMPUR, Oct 14 -- AM Best, a global rating agency focused on the insurance industry has removed from under review with negative implications of Capital General Insurance Company Limited (CGI) Papua New Guinea.
The agency also affirmed the Financial Strength Rating of C+ (marginal) and the Long-Term Issuer Credit Rating of ‘b-’ of CGI, making negative outlook assigned to these ratings.
The ratings reflect CGI’s balance sheet strength, which AM Best described as adequate, as well as its strong operating performance, limited business profile and weak enterprise risk management.
The ratings factor is in a neutral impact from the company’s 100 per cent ownership by Capital Insurance Group Limited.
Following the identification of historical misreporting of reinsurance transactions over a number of years, the company restated its 2017 year-end financial position as part of its latest annual report and accounts.
This restatement resulted in the company’s shareholders’ equity exhibiting a high degree of volatility over recent years, which has driven variability in CGI’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio.
Prospectively, AM Best expects the company’s small absolute capital base (US$8.6 million as of last year-end), to remain highly sensitive to changes in earnings, reserves or other balance sheet items. (US$1 = RM4.18)
The negative outlooks reflect AM Best’s expectation of near-term pressure on operating performance and the potential for continued volatility in risk-adjusted capitalisation. More details at http://www.ambest.com
-- BERNAMA
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