A.M. Best Withdraws Ratings of BEST RE Companies
LONDON -- December 18, 2012
A.M. Best Europe – Rating Services Limited has downgraded the financial
strength rating (FSR) to B (Fair) from B++ (Good) and issuer credit rating
(ICR) to “bb” from “bbb” of BEST RE (L) Limited (BEST RE) (Malaysia). A.M.
Best also has downgraded the FSR to B+ (Good) from B++ (Good) and the ICR to
“bbb-” from “bbb+” of BEST RE FAMILY (L) Limited (BEST RE FAMILY) (Malaysia).
The outlook for BESTREremains negative, while the outlook for
BESTREFAMILYhas been revised to negative from stable.
Concurrently, A.M. Best has withdrawn the ratings at the companies’ request.
The rating actions are due to the materially weakened risk-adjusted capital
position of BEST RE, its reduced profitability and A.M. Best’s concerns over
the company’s enterprise risk management.
During the third quarter of 2012, BEST RE experienced considerable adverse
development due to the Thailand flood events in 2011, resulting in
underwriting losses and a deterioration in its capital position. The events of
the past year have demonstrated a failure to apply underwriting controls,
which raises concerns over the group’s ERM capabilities, particularly at BEST
RE. Following these events, BEST RE has seen a turnover in its senior
A.M. Best has removed the implicit support to the subsidiaries by Islamic Arab
Insurance Co. (Salama) given that it has not provided capital support to the
subsidiaries despite BEST RE being under capital strain.
The ratings of BEST RE FAMILY reflect the potential negative impact from its
sister company, BEST RE.
The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Key criteria utilised include: “Risk Management and the Rating
Process for Insurance Companies”; “Understanding BCAR for Property/Casualty
Insurers”; “Takaful (Shari’a Compliant) Insurance Companies”; “Rating Members
of Insurance Groups”; and “Insurance Holding Company and Debt Ratings”. Best’s
Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to
required disclosures: A.M. Best Europe - Rating Services Limited Supplementary
A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best
Company. Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more information,
Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
A.M. Best Co.
Associate Financial Analyst
+(44) 20 7397 0321
+(44) 20 7397 0325
Senior Manager, Public Relations
+(1) 908 439 2200, ext. 5378
Assistant Vice President, Public Relations
+(1) 908 439 2200, ext. 5644
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