A.M. Best Assigns Ratings to NEWGT Reinsurance Company, Ltd.
HONG KONG -- January 11, 2013
A.M. Best Asia-Pacific Limited has assigned a financial strength rating of A-
(Excellent) and issuer credit rating of “a-” to NEWGT Reinsurance Company,
Ltd. (NEWGT) (Bermuda). The outlook assigned to both ratings is stable.
The ratings reflect NEWGT’s stable operating profitability, aided by its
retrocession coverage in its general account and the implicit support from the
parent company, Itochu Corporation (Itochu). NEWGT was incorporated in October
2005 as a wholly owned subsidiary of Itochu. NEWGT is a Class 3 general
business reinsurer and is registered under the Segregated Accounts Company Act
2000 in Bermuda. NEWGT’s business is well diversified due to the broad range
of trading business activities conducted by Itochu, which is underwritten by
the general account. Under the segregated account, some risks have been
underwritten, which are well spread through personal accident and residential
fire, with the exception of the catastrophe business, which has been in run
off since January 2012.
NEWGT reported favorable operating performance in its general account over the
past five years, mainly driven by its major line of marine cargo product,
which is diversified globally. NEWGT’s retrocession coverage against its major
product line helped it to stabilize its underwriting results during the past
years. As a single parent captive, NEWGT receives support from Itochu to grow
in the captive market in the form of capital injections, as well as support
from its integrated risk management system.
Partially offsetting these positive rating factors include NEWGT’s continuous
expansion into the third party business, volatile operating performance in the
segregated account and the uncertain outlook of the global economy. NEWGT will
participate in Lloyd’s Syndicates in 2013, which accounts for a significant
proportion of its consolidated net premium income in the forecast periods.
Although Itochu will support this new business by injecting capital, the
increase in the third party business could increase volatility in NEWGT’s
operating performance. NEWGT reported a sharp increase in its loss ratio in
the segregated account in fiscal year 2010 as it has experienced several large
claims from the catastrophe business that has been in run off since 2012. The
uncertain economy outlook could impact NEWGT’s operating performance, as the
sales of marine cargo are susceptible to trading activities.
Downward rating pressure could arise if there is a sharp decline in NEWGT’s
risk-adjusted capitalization led by a deterioration in its operating
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 utilized include: “Alternative Risk Transfer (ART)”;
“Understanding Universal BCAR”; “Risk Management and the Rating Process for
Insurance Companies”; “Evaluating Country Risk”; and “Catastrophe Analysis in
A.M. Best Ratings.” Best’s Credit Rating Methodology can be found at
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more information,
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
A.M. Best Company
Seewon Oh, +852-2827-3404
Senior Financial Analyst
Moungmo Lee, +852-2827-3402
Rachelle Morrow, +(1) 908 439 2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
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