New Delhi, Oct. 2: Eleven Asian reinsurers have unanimously decided to ask the Bangkok Credit Rating Association to evolve a new rating standard applicable to the Asian insurance community.
These standards will be communicated by the association to the rating agency members.
“The association is likely to make a presentation explaining its criterion for rating a company. If the reinsurers are satisfied, we may ask the association to develop an unbiased rating system for us,” said General Insurance Corporation managing director P. B. Ramanujam.
The issue will come up in the next Asian Reinsurers Summit scheduled to be held in Jakarta next year.
The decision to approach the association was a follow up of the reinsurers’ meet at a three-day brainstorming session held in Goa last month.
The reinsurers decided to work on a mutually agreed credit rating system specifically for the Asian region.
Offended by the “bias” of global rating agencies like Standard and Poor’s which debarred even strong Asian re-insurers from gaining a high credit by bringing in country risk into their calculations, the re-insurers decided an alternative system needed to be evolved.
Most insurers and reinsurers feel that a host of socio-political reasons prevent the American rating agency from giving A, AAA or BBB rating to Asian reinsurers. These firms argue that a lower credit rating given to financially strong and old companies does not reflect their true strength and instead spoils their image.
The reinsurers who are likely to actively participate in the Jakarta summit include Toa Re, Singapore Re, China Re, Asian Re, Japan Re, Thailand Re, Korean Re and Indonesia Re.