AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Marble Reinsurance Corporation (Marble Re) (Micronesia). The outlook of these Credit Ratings (ratings) is stable.

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

The balance sheet strength is well-supported by Marble Re’s risk-adjusted capitalisation, which is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s capital base, albeit small, is considered to be sufficient, supported by low net underwriting leverage and minimal investment risk due to a highly liquid and conservative investment portfolio. Although the company’s reinsurance dependency is moderately high, the risk is mitigated by its high quality and well-diversified reinsurance panel.

Marble Re’s operating performance has been consistently strong, with a five-year average combined ratio of 59% (2019-2023). For the fiscal year ended 31 March 2024, the company recorded moderate growth in both premium income and net profit, while its combined ratio remained stable and below 55%. While moderate volatility exists in its major business line, marine cargo insurance, primarily due to a high correlation with the trading business of its parent, Marubeni Corporation (Marubeni), Marble Re’s underwriting profitability metrics have been relatively stable mainly due to stringent underwriting guidelines and a conservative reinsurance programme that help reduce potential underwriting volatility. The company has made a strategic decision recently to raise the net retention limit for its non-marine business. Nevertheless, the company’s overall underwriting profitability is expected to remain stable given the historically low loss ratio of the existing business and its modest contribution to the total portfolio.

As a wholly owned subsidiary and a single-parent captive of Marubeni, a major general trading company in Japan, Marble Re provides reinsurance and insurance protection against group-related risks across different regions. While Marble Re continues to explore further diversification of its business portfolio, marine cargo will remain the company’s primary focus in the intermediate term. The company is well-integrated within the parent group with respect to risk management, corporate governance and internal control systems.

Negative rating actions could arise if Marble Re’s operating performance materially and adversely deviates from its business plan to a level that no longer supports the current assessment. Negative rating also could occur if there is a significant deterioration in Marubeni’s credit profile, including its operating profitability, financial leverage and interest coverage levels. Positive rating actions could occur if Marble Re demonstrates sustained and notable improvement in its balance sheet strength fundamentals or material growth in its capital base.

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.

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