AM Best affirmed the financial strength rating of B++ (good) and the issuer’s long-term credit rating of “bbb+” (good) from
The ratings reflect the strength of CIC Guam’s balance sheet, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate management of business risks.
CIC Guam’s risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR), is rated at the highest level, supported by its low net underwriting leverage. In addition to the modest size of its capital base, key balance sheet offsetting factors include moderate common equity leverage, which adds a level of potential volatility to its capital. However, these factors are partly mitigated by the company’s high risk, debt-free capital and strong liquidity.
CIC Guam’s operating performance has been consistently profitable, primarily driven by its low claims ratio which benefits from the company’s disciplined underwriting and pricing, while its expense ratio and net investment margin are lagging compared to its industry peers. Although the company has continued to show a favorable underwriting margin, a reduced premium base in recent years has resulted in some contraction in its underwriting earnings and overall result, which (together with an expanded capital base) has by therefore resulted in a return to excess measures that compare less favorably with the composite benchmarks. However, AM Best also notes the strong business growth in 2021, which has resulted in some improvement in the expense ratio compared to the previous year.
CIC Guam is a property and casualty insurer on the island of
Positive rating actions could occur if CIC Guam can grow its insurance business profitably, such that it can improve its expense ratio and demonstrate a return on excess metrics that outperform its industry peers in a sustainable manner. . Negative rating actions could occur if the company’s risk-adjusted capitalization decreases significantly or if there is a material change in its risk appetite. Negative rating actions could also arise in the event of a material deterioration in the credit profile of its ultimate parent company, THC, including its operating profitability, financial leverage and interest coverage levels.
Ratings are communicated to rated entities before publication. Unless otherwise indicated, the ratings have not been changed as a result of this communication.
This press release relates to credit ratings that have been published on AM Best’s website. For all rating information relating to the release and relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit AM Best’s Recent Rating Activity webpage. For more information on the use and limitations of credit rating opinions, please see Best’s Guide to Credit Ratings. For more information on the proper use of Best’s Credit Scores, Best’s Performance Ratings, Best’s Preliminary Credit Ratings, and AM Best’s press releases, please see the Guide to Proper Use of Best’s Best ratings and reviews.
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Source: AM Best