Singapore Re has received a revised outlook from AM Best to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of "a" (Excellent). The outlook of the FSR is stable.
The ratings reflect Singapore Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. In addition, the ratings factor in rating enhancement from the company’s ultimate parent, Fairfax.
The revision of the Long-Term ICR outlook to positive from stable reflects AM Best’s expectation that Singapore Re will continue to demonstrate a trend of favourable underwriting and operating performance over the near to medium term, while maintaining a strong balance sheet strength assessment. Singapore Re reported a return-on-equity ratio of 21.3% in 2024 and its operating results in the first half of 2025 remained favourable. The company’s investment income, which comprises mainly interest and dividend income, continues to provide a sizable contribution to overall earnings. Prospectively, AM Best expects Singapore Re’s operating performance to remain robust, supported by healthy business growth, while maintaining prudent underwriting discipline.
Singapore Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation that is expected to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s investment portfolio is focused on cash, deposits and fixed-income securities, albeit with some exposure to higher-risk asset classes such as equities. Singapore Re strategically utilises retrocession to increase its underwriting capacity and manage exposure to catastrophe accumulations and large single risks. The credit quality of the retrocession panel remains excellent, with the majority of reinsurance recoverables held with highly rated counterparties. Additionally, Singapore Re benefits from good financial flexibility due to the support provided by Fairfax.
As a modest-sized non-life reinsurer based in Singapore, Singapore Re writes treaty and facultative business primarily in Asia and the Middle East. Geographic diversification is supported by operations across these regions, with the top three markets being Singapore, India and China, based on 2024 gross premium written. A partially offsetting factor is the company’s elevated cedant concentration risk; however, this risk is mitigated partly by the fact that some of its largest cedants are companies within the Fairfax group or affiliates and others that have long-standing relationships.
The rating enhancement from Fairfax factors in explicit and implicit support from the group, including access to shared resources and services across various business functions. Despite Singapore Re’s operations accounting for a small component of Fairfax’s consolidated revenue and earnings, the company is considered strategically important to the group’s international expansion strategy and provides access to local and regional business.