AM Best Revises Outlooks to Positive for Starr International Insurance (Thailand) Public Company Limited

AM Best has revised the outlooks to positive from stable for the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Starr International Insurance (Thailand) Public Company Limited (SIIT) (Thailand).

The Credit Ratings (ratings) reflect SIIT’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. In addition, SIIT benefits from rating enhancement arising from the implicit and explicit support provided by Starr International Company, Inc. (Starr Group).

The positive outlooks reflect the expectation that SIIT will strengthen its integration with the Starr Group over the medium term, supported by the ongoing execution of its strategic business initiatives and a longer operational track record.

SIIT’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which is expected to remain at the strongest level over the medium term. Although SIIT has a small absolute capital base, it benefits from good financial flexibility and reinsurance support provided by Starr Group. The company has a conservative investment portfolio comprised principally of high-quality bonds and cash deposits. However, SIIT has a high reliance on reinsurance to increase its underwriting capacity and to manage its exposure to catastrophe accumulations and large single risks, although credit risk is mitigated by the use of well-rated reinsurance counterparties.

AM Best views SIIT’s operating performance as adequate, supported by the ongoing execution of its business transformation initiatives. Underwriting results have improved significantly following the company's acquisition by the Starr Group in December 2022, benefitting from cost rationalisation initiatives, economies of scale and favourable reinsurance commissions. Investment returns, mainly arising from interest income remains a small, but stable contribution to the overall earnings. Prospective earnings are expected to be supported by robust underwriting performance and stable investment income.

SIIT’s business profile is assessed as limited, reflecting its position as a small-size non-life insurer in Thailand. The company is considered important to the group in terms of accessing the Thailand insurance market and enlarging its presence in Asia. Since its acquisition, SIIT has repositioned its strategic focus towards the construction, engineering and energy lines. SIIT benefits from the group’s technical expertise in underwriting these lines, and its portfolio shows a concentration toward these segments.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

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