AM Best has affirmed Singapore Reinsurance Corporation Limited’s (Singapore Re) Financial Strength Rating of A and Long-Term Issuer Credit Rating of “a”, with a stable outlook for these ratings.
The ratings reflect Singapore Re’s balance sheet strength, which AM Best assesses as strong, adequate operating performance, limited business profile, and effective risk management. They also consider additional support from its parent company, Fairfax Financial Holdings Limited.
Singapore Re’s balance sheet strength is supported by risk-adjusted capitalisation, expected to remain at the strongest level over the medium term. Its investment portfolio is focused on cash, deposits, and fixed-income securities, with some exposure to higher-risk assets like equities.
The company uses retrocession agreements to expand underwriting capacity and manage exposure to catastrophes and large risks. Most of its reinsurance recoverables are with highly rated counterparties, ensuring excellent credit quality. Fairfax’s backing also provides Singapore Re with financial flexibility.
Singapore Re’s operating performance is deemed adequate, supported by solid underwriting results and positive investment income. While past performance faced volatility from market competition and natural catastrophe activity, recent years have shown improvement due to favorable claims experience and business growth.
In 2023, the company reported an operating profit of SGD 7.3 million, down from SGD 48 million in 2022, mainly due to a one-off reserve adjustment under IFRS 17, partly offset by higher investment income. Year-to-date 2024 results have normalised, returning to targeted profitability. AM Best expects Singapore Re’s operating performance to remain at the adequate level, driven by robust business growth and disciplined underwriting.
AM Best assesses Singapore Re’s business profile as limited, noting its modest size and focus on treaty and facultative reinsurance in Asia and the Middle East, with Singapore and India as key markets. While the company faces elevated cedant concentration risk, this is partly mitigated by strong ties with Fairfax group affiliates and long-standing relationships.
Fairfax’s rating enhancement reflects its explicit and implicit support, including shared resources and services. Singapore Re, though a small contributor to Fairfax’s revenue, is strategically important to its international expansion and regional market access.
