AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent) for Singapore Reinsurance Corporation Limited, based in Singapore. The outlook for both ratings is stable.
According to AM Best, the ratings reflect Singapore Re’s strong balance sheet, adequate operating performance, limited business profile, and appropriate enterprise risk management.
The assessment also incorporates a rating enhancement linked to the company’s ultimate parent, Fairfax Financial Holdings Limited.
The company’s balance sheet strength is supported by risk-adjusted capitalization, which is expected to remain at the strongest level in the medium term. Its investment portfolio is concentrated in cash, deposits, and fixed-income securities, alongside limited exposure to higher-risk assets like equities.
Singapore Re uses retrocession to manage catastrophe risks and increase underwriting capacity, with the retrocession panel composed primarily of highly rated counterparties. The company also benefits from financial flexibility provided by Fairfax.
Operating performance at Singapore Re is categorized as adequate, with underwriting results and investment returns contributing to profitability. While its underwriting performance has historically been volatile due to competitive pressures and natural catastrophe events, recent years have shown improvement.
In 2023, Singapore Re recorded an operating profit of SG$7.3 million, compared to SG$48 million in 2022. The decline was attributed to a one-time reserve adjustment linked to changes under IFRS 17, partially offset by increased investment income. The company’s 2024 year-to-date results indicate a return to targeted profitability, supported by steady investment income from interest and dividends.
AM Best anticipates the company’s operating performance will remain adequate, supported by disciplined underwriting and growth in business volume.
Singapore Re’s business profile is described as limited, given its modest scale as a non-life reinsurer. The company’s focus is on treaty and facultative reinsurance in Asia and the Middle East, with its largest markets being Singapore and India, based on 2023 gross premium written.
While it faces elevated cedant concentration risk, this is mitigated by long-standing relationships with major cedants, including Fairfax-affiliated companies.
The rating enhancement reflects support from Fairfax, including access to shared resources and services. Although Singapore Re represents a small portion of Fairfax’s overall revenue and earnings, it plays a strategic role in the group’s international expansion by providing access to regional markets.
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