AM Best Affirms Credit Ratings of NEWGT Reinsurance Company, Ltd.

AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of NEWGT Reinsurance Company, Ltd. (NEWGT) (Bermuda). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect NEWGT’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

NEWGT’s balance sheet strength is well-supported by its risk-adjusted capitalisation, which is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). As of the fiscal year ended on 31 March 2024, NEWGT’s capital and surplus increased by 21% mainly from increased retained earnings, with no dividend upstream made during the period. The company has a moderate level of reinsurance dependency; however, its exposure to potential credit risk is mitigated partially by a high-quality and well-diversified reinsurance panel.

NEWGT’s operating performance has been consistently positive during the most recent five-year period. For the fiscal year ended 31 March 2024, the gross premium and net premium earned from ITOCHU Corporation (ITOCHU)-related business, remained relatively flat as its premium income became normalized from the strong growth in the previous year while its underwriting profit showed improvement with favourable loss experience during the period. Notwithstanding the moderate volatility in the major lines of marine cargo business due to the impact of commodity price fluctuations, AM Best expects that NEWGT’s operating performance will remain profitable over the intermediate term given the company’s prudent underwriting practices and reinsurance programmes.

As a wholly owned subsidiary and captive insurer of ITOCHU, one of Japan’s largest general trading companies, NEWGT provides reinsurance protection against group-related risks across various regions. A majority of NEWGT’s business comes from ITOCHU-related marine business, and the remaining portfolio consists of a diverse mix of non-life business lines, including theft insurance, renters’ insurance, and group personal accident. NEWGT is well-integrated within the group with respect to risk management, corporate governance and internal control systems.

Negative rating actions could occur if NEWGT’s risk-adjusted capitalisation significantly deteriorates, such as from heightened underwriting risk or an excessive dividend payout to its parent. Negative rating actions also could arise if there is significant deterioration in ITOCHU’s credit profile, including its operating profitability, financial leverage and interest coverage levels. Positive rating actions could occur if NEWGT demonstrates sustained and notable improvement in its underwriting and operating profitability for a period of time, while maintaining a robust level of risk-adjusted capitalisation.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that 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 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 regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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