The rating actions reflect CIC Saipan’s unfavorable underwriting performance since 2012 that resulted in operating losses and overall declines in its risk-adjusted capitalization. In 2013, the company’s net loss was primarily due to major losses incurred in the motor, general liability and workers’ compensation lines. Although CIC Saipan has implemented multiple measures to restore its profitability, the ongoing challenges are expected to weigh on the underwriting results in the near term, given the economic decline in the territory.
The ratings take into consideration CIC Saipan’s supportive risk-adjusted capitalization, its leading position in the non-life insurance market in CNMI and improved claim management revision. The ratings also acknowledge the support the company receives from its parent,
The ratings of CIC Guam reflect its solid risk-based capitalization, continuous favorable operating results and improved claim management revision. The ratings also acknowledge the support the company receives from THC, its parent company.
CIC Guam’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supportive of its current ratings. CIC Guam’s capitalization level has consistently improved as a result of CIC Guam’s favorable underwriting and investment performance in recent years. The company’s consistent positive retained earnings are a reflection of its emphasis on prudent underwriting and efforts to improve its claims management, along with its diversified investment strategy.
Partially offsetting these positive rating factors are the competitive landscape in
CIC Guam’s loss ratio deteriorated in 2013, mainly due to a claims audit during the year that revealed reserve deficiencies in the workers’ compensation and motor lines. As a result, a substantial amount of loss-reserve adjustment was made to maintain reserve adequacy.
Guam’s general insurance industry continues to be very competitive. CIC Guam’s premium declined in 2013 due to stricter underwriting and price competition, which caused a number of non-renewals. In addition, the company in
Future positive rating actions could occur if CIC Guam shows continuous improvement in its operating results and expense management while regaining its market share and enhancing loss-reserve adequacy.
Conversely, negative rating actions could occur if CIC Guam’s operating performance deteriorates, resulting in a substantial decline in its risk-based capitalization level.
The methodology used in determining these interactive 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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This rating announcement has been issued by
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