TEXT-S&P revises outlook on ACR to stable;affirms rating

Nov 29 -

Overview

-- ACR's capitalization is likely to remain moderately strong for the

rating for the next 12-24 months.

-- We are revising the rating outlook on the Singapore-based insurer to

stable from negative.

-- We are also affirming our 'A-' local currency long-term financial

strength and issuer credit ratings.

-- We are also raising our ASEAN regional scale rating on ACR to 'axAA'

from 'axAA-'.

Rating Action

On Nov. 29, 2012, Standard & Poor's Ratings Services revised the rating

outlook on Singapore-based Asia Capital Reinsurance Group Pte. Ltd. (ACR) to

stable from negative. Standard & Poor's also affirmed its 'A-' local currency

long-term financial strength and issuer credit ratings. At the same time, we

raised our ASEAN regional scale rating on ACR to 'axAA' from 'axAA-'.

Rationale

The outlook revision reflects our view that ACR's capitalization is likely to

remain moderately strong for the rating for the next 12-24 months. This is due

to a capital injection by a strategic investor, ACR's quota-share agreement

with U.S.-based National Indemnity Co. (local currency AA+/Negative/--), and

its greater use of retrocession to protect its capital base.

We do not expect loss claims related to the floods in Thailand in 2011 to

increase significantly since we believe the company has received notification

of all substantial claims. ACR has adjusted for the notified claims following

consultations with independent loss adjustors. However, the possibility of

loss development from the adjusted claims still exists. We have accounted for

possible increases in these claims while assessing the company's credit

profile.

We expect ACR's operating performance to recover to satisfactory levels, given

the company's de-risking exercise and the increase in reinsurance premium

rates. The fluctuation in underwriting performance in recent years was mainly

due to the impact of catastrophes in the region. In line with the rest of the

reinsurance industry, ACR has tried to manage its exposure by tightening terms

and conditions on its business, requesting more information on clients'

underlying exposures, and increasing retrocession protection. We expect these

initiatives to lower the volatility in the company's operating performance.

Losses due to the floods in Thailand pushed the company's combined ratio to

134.7% in the fiscal year ended March 31, 2012 (fiscal 2011).

In our opinion, ACR's competitive position is satisfactory. Our view is

despite the company's short operating history and its significant business

growth. ACR's premium growth slowed in fiscal 2011 as it focused on managing

claims, catastrophe exposure, and capital. The company has since shifted focus

back to business growth. In our view, losses related to the Thai floods

weakened clients' confidence in ACR. However, we believe the impact is

manageable and the company's overall business profile is not significantly

affected.

Outlook

The stable outlook reflects our view that ACR's losses related to the floods

in Thailand have stabilized and that the company has sufficient capital buffer

to absorb further increases in claims. We believe the probability of ACR

facing losses similar to those in late 2011 are low due to the tightening of

terms and conditions on new business and higher protection of capital from

retrocession.

We may lower the ratings if ACR's capitalization deteriorates to a level that

is not supportive of the rating and if its underwriting performance weakens

due to significant underwriting losses. We may also lower the ratings if the

company's business profile deteriorates in the upcoming renewals due to

declining confidence of clients in the company.

We may upgrade ACR if its capital is extremely strong, it achieves its

business projections profitably, and its risk management is resilient to

insurance events. We consider the possibility of an upgrade to be remote for

the next two to three years.

Related Criteria And Research

-- Refined Methodology And Assumptions For Analyzing Insurer Capital

Adequacy Using The Risk-Based Insurance Capital Model, June 7, 2010

-- Interactive Ratings Methodology, April 22, 2009

-- Group Methodology, April 22, 2009

-- Summary Of Standard & Poor's Enterprise Risk Management Evaluation

Process For Insurers, Nov. 26, 2007

Ratings List

Ratings Affirmed; Outlook Action

To From

Asia Capital Reinsurance Group Pte Ltd.

Counterparty Credit Rating

Local Currency A-/Stable/-- A-/Negative/--

Financial Strength Rating

Local Currency A-/Stable/-- A-/Negative/--

Upgraded

To From

Asia Capital Reinsurance Group Pte Ltd.

ASEAN Rating Scale axAA/--/-- axAA-/--/--

Source: http://news.yahoo.com/text-p-revises-outlook-acr-stable-affirms-rating-094326486--sector.html

xi jinping matt bomer westminster kennel club dog show jeremy lin game winner chocolate covered strawberries shrimp scampi kate upton si cover