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Singapore: MAS approves sale of ACR to Chinese parties

Source: Asia Insurance Review | Jan 2017

MAS has approved the sale of 100% of ACR Capital Holdings (ACR), Asia Capital Re’s parent company, to Shenzhen Qianhai Financial Holdings (QFH) and Shenzhen Investment Holdings (SIHC).
 
   Meanwhile, both S&P and A.M. Best have reaffirmed Asia Capital Re’s ‘A-’ financial strength rating.
 
   Asia Capital Re’s S&P ‘A-’ (Strong) rating was assigned a stable outlook. In removing the Singapore-domiciled reinsurer from credit watch imposed when the proposed acquisition was announced on 5 October 2016, S&P indicated that it expects that ACR’s new ownership will not materially impact Asia Capital Re’s autonomy in its business, underwriting, investment and capital management strategies.
 
   S&P stated that it expects Asia Capital Re’s “extremely strong capital adequacy”, “satisfactory business risk profile” and stable competitive position to be maintained, supported by its “selective growth strategy and high reinsurance utilisation”. 
 
   A.M. Best also highlighted Asia Capital Re’s strong risk-adjusted balance sheet which it noted “is supported by low underwriting leverage and good asset quality, including the high quality of its reinsurance assets and investment portfolio.” While the reinsurer’s record of underwriting performance prompted A.M. Best to revise its outlook from stable to negative, the rating agency noted that management has “a detailed strategy to remediate underwriting performance and implement initiatives to improve disclosure.”
 
   QFH is wholly owned by Qianhai Authority which administers the Qianhai Free Trade Zone in Shenzhen. It owns a 20% stake in the newly established Qianhai Re. SIHC is owned by the Shenzhen government. It has been reported that the Chinese investors are paying US$1 billion for ACR.

 

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