know about this AM Best affirms the credit ratings of Quest Insurance Group Limited – InsuranceNewsNet
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I am better has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” (Fair) of
The ratings reflect the strength of Quest’s balance sheet, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and adequate enterprise risk management (ERM). In addition, the ratings take into account a neutral impact of the company’s ultimate majority ownership by
Quest’s balance sheet strength assessment is supported by its risk-adjusted capitalization, which was at the strongest level in fiscal 2022, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s technical risk has increased significantly in recent years due to strong portfolio growth. However, this was partially offset by its improved asset quality following the sale of an underlying asset in an illiquid private equity investment in fiscal 2021. The current asset allocation of cash, time deposits and loans is expected to affiliates will remain practically unchanged in the medium term. finished. Offsetting factors for balance sheet strength include the company’s small absolute capital base, which increases the sensitivity of risk-adjusted capitalization to stress scenarios and changes in future performance, business growth and dividend payments.
AM Best assesses Quest’s operating performance as adequate and notes its moderate level of volatility. The company has a five-year average return on equity ratio of 18.8% (fiscal years 2018 to 2022), and overall earnings during this period reflect a combination of strong technical performance and positive investment returns. The company’s technical performance has improved in the last two years due in large part to a lower expense ratio despite the deterioration of its loss ratio. The better expense ratio was primarily due to economies of scale, as well as a lower commission rate due to changes in the product mix and the pattern of premium earnings for long-term products as those policies mature. However, recent rapid business growth in the company’s less profitable comprehensive vehicle insurance (CVI) has resulted in an increase in the loss ratio; this is expected to continue to drive potential volatility in its operating performance over the medium term.
Quest’s business profile assessment of limited reflects its small market presence and relatively concentrated niche product offering, largely as a provider of CVI and mechanical breakdown insurance (MBI) in
AM Best assesses Quest’s ERM as appropriate given the current size and complexity of the company’s operations. Following recent business expansion, the company is exposed to a high level of underwriting and execution risk. However, this risk has been partially mitigated to date through proper monitoring of underwriting performance and a conservative pricing and reserving approach supported by an outside actuary. AM Best believes that Quest’s risk management capabilities are appropriate for its key risks and expects continued development as the company increases its scope of operations in the near term.
Ratings are communicated to rated entities prior to publication. Unless otherwise noted, ratings have not changed since that communication.
This news release relates to credit ratings that have been posted on AM Best’s website. For full rating information related to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity Web page. For additional information on the use and limitations of credit rating opinions, see Best Credit Score Guide. For information on the proper use of Best’s Credit Ratings, Best’s Performance Reviews, Best’s Preliminary Credit Reviews, and AM Best’s press releases, see Guide to the proper use of Best ratings and evaluations.
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Source: AM Best