SINGAPORE, March 25 (Bernama-BUSINESS WIRE) — AM Best has downgraded the Financial Strength Rating to C+ (Marginal) from C++ (Marginal) and the Long-Term Issuer Credit Rating to “b-” from “b+” of Capital General Insurance Company Limited (CGI) (Papua New Guinea). Additionally, AM Best has placed these Credit Ratings (ratings) under review with negative implications. CGI is a subsidiary of Capital Insurance Group Limited (CIGL), which also is domiciled in Papua New Guinea.
The rating downgrades reflect a deterioration in AM Best’s view of CGI’s balance sheet strength fundamentals following a control failure that is expected to lead to a significant deterioration in risk-adjusted capitalization for the year-end 2018, as measured by Best’s Capital Adequacy Ratio (BCAR). While the company has yet to finalize its year-end 2018 financial statements, AM Best expects reported shareholder’s equity to decline significantly when compared with year-end 2017 and prior expectations for 2018. The deterioration in the company’s capital position follows the identification and correction of historical mis-reporting of reinsurance transactions over a number of years. The control failure is expected to have led to the historical overstatement of the company’s balance sheet position, as well as earnings.