AM Best Assigns Financial Strength Rating of B++ to MTM Assurance Ltd.

Strategic Insights -

AM Best, a global credit rating agency, has issued a news release assigning a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of "bbb+" (Good) to MTM Assurance Ltd. (MTM) (Barbados). This rating reflects MTM's balance sheet strength, operating performance, business profile, and enterprise risk management. MTM operates in a niche market, providing revenue loss reinsurance for financial services industry partners primarily in the Canadian market. The stable outlook assigned to these ratings indicates that AM Best expects MTM's financial performance to remain stable in the near term.

Key Takeaways:

  • MTM's balance sheet strength is assessed as very strong by AM Best, supported by its risk-adjusted capitalization being at the strongest level, as measured by the Best's Capital Adequacy Ratio (BCAR).
  • MTM's capital is accreted through its retained earnings, with modest dividends paid to shareholders, contributing to its strong liquidity position.
  • Approximately one-fifth of MTM's invested assets are held in cash and short-term fixed investments, providing a buffer against potential risks.
  • However, about two-thirds of MTM's investments are private loans, which elevates balance sheet asset risk.
  • MTM's operating results have been robust for fiscal-year 2024, with near-term results indicating a continuation of this trend.
  • Management maintains strong oversight of operations and has extensive knowledge of its business segment, contributing to the company's operating stability.
  • MTM has implemented a process for risk identification, documentation, and reporting, as well as for modeling and pricing risk management, in coordination with a third party.

Statistics:

  • MTM's risk-adjusted capitalization is at the strongest level, as measured by the Best's Capital Adequacy Ratio (BCAR)
  • Approximately one-fifth of MTM's invested assets are held in cash and short-term fixed investments
  • About two-thirds of MTM's investments are private loans
  • MTM's operating results have been robust for fiscal-year 2024
  • MTM has good liquidity, with strong retained earnings and modest dividend payments

Sources:

  • AM Best, "MTM Assurance Ltd. (MTM) (Barbados) - AM Best Affirms Credit Ratings of MTM Assurance Ltd. Credit Rating Action Summary"
  • AM Best's Recent Rating Activity web page
  • AM Best's Guide to Best's Credit Ratings
  • AM Best's Guide to Proper Use of Best's Ratings & Assessments
  • www.ambest.com