Business

Thursday January 19, 2012

Fitch revises Labuan Reinsurance outlook to negative


PETALING JAYA: Labuan Reinsurance (L) Ltd's outlook has been revised to negative from stable by Fitch Ratings, although the insurer's financial strength rating has been affirmed at A-.

The ratings agency said in a statement that the revision “reflects the adverse impact on the company's financial performance and capital level from several unprecedented catastrophes in Asia during 2011.”

Labuan Reinsurance incurred a net loss of US$4.5mil (RM14.03mil) for the nine months to September.

This compares with a net profit of US$13.7mil (RM42.7mil) for the financial year ended Dec 31, 2011 (FY11).

Fitch said the combined ratio for the full year of 2011 was expected by management to be about 121% versus 99.2% in FY10.

This was driven by adverse claims arising from the various catastrophes in Asia, including the Thailand floods, tsunami in Japan and earthquake at Christchurch, New Zealand.

It added, however, that the ratings reflected the reinsurer's diverse geographical spread with limited business concentration risks, highly liquid investment mix, as well as sound capital quality.

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