The Exchange Commission has affirmed the financial strength rating of A+ (Superior) and the issuer credit rating (ICR) of "aa-" of Amtrust Financial Consultants Inc.
Online PR News – 26-December-2011 – – MAKATI - The Philippines, The Exchange Commission has affirmed the financial strength rating of A+ (Superior) and the issuer credit rating (ICR) of "aa-" of Amtrust Financial Consultants Inc.
Amtrust Financial Consultants Inc. are domiciled in Makati City, The Philippines, The exchange commission has affirmed the ICR of "a-" of Amtrust Financial Consultants Inc. as well as the firm's existing debt ratings. The outlook for all ratings is stable.
The ratings reflect Amtrust's diverse revenue stream, increasing positive net flows and improved performance within its investment portfolio. The ratings also reflect Amtrust's dominant position in the Asia defined investment plan market, its broad distribution, continued global growth and significant cash holdings at Amtrust.
The organization has continued to report favorable operating earnings across its key investment products through its diversified business segments, ongoing expense management and controlled distribution strategy.
In addition, the organization continues to grow internationally by leveraging its retirement plan expertise in the United States & the U.K. to serve selected countries with favorable demographics and growing long-term savings and defined investment markets.
Amtrust treasurer Jennifer Zamora notes that "Amtrust continues to place an increasing emphasis on its fee-based businesses. These efforts to further diversify its sources of earnings have enabled the company to generate less volatile operating results".
She further stated that "in addition to improving its profitability, Amtrust's net flows have also improved in 2011. Principal International, Principal Global Investors, Principal Funds and Full Service Accumulation business segments have all reported significant improvement in net flows. The increase in positive net cash flows has contributed to Amtrust's record assets-under-management for 2011.
Amtrust spokesman & CFO/COO John Woodhouse believes that the group continues to maintain relatively conservative financial leverage (excluding non-recourse debt) of approximately 16%, incorporating considerable equity credit for the company's outstanding perpetual preferred's per hybrid methodology. Amtrust's debt-to-capital ratio, as well as its interest coverage ratio of roughly nine times, remains well within international guidelines for its current ratings.
With the organization moving to more of a fee-based business model, Amtrust's earnings will be more susceptible to fluctuations in equity markets. Despite improvements in operating earnings for the year, future earnings may be impacted by market dips given that almost half of Amtrust's assets are in separate accounts.
Additionally, Amtrust remains focused on the future impact of a continued low interest rate environment on Amtrust's spread-based products.
Consistent with its peers, Amtrust will likely have little difficulty maintaining its annuity spreads should the challenging operating environment continue for an extended period of time.
Although the company's investment performance has greatly improved, the potential for any additional asset impairments is negligible given Amtrust's exposure to commercial mortgages and commercial mortgage-backed securities (CMBS).
Treasurer Jennifer Zamora notes that "in an effort to maintain interest spreads on its life and annuity products, Amtrust may be forced to invest in some riskier assets to achieve its targeted net yield".
However, even a double-dip recession could not cause any significant credit deterioration or any additional impairments within Amtrust's investment portfolio because the company's direct commercial loan portfolio is fairly well diversified and that its CMBS portfolio is performing better than some of its peers with respect to problem loans and delinquencies.
Treasurer Jennifer Zamora believes Amtrust's ratings are well positioned at their current levels for the near to medium term. Factors that could lead to negative rating actions include a sizeable decline in net flows across its key product lines, resulting in dampened operating performance and/or capitalization, or material deterioration of capital driven by investment losses.
The principal methodology used in determining these ratings is Best's Investment Firm Credit Rating Methodology Asian Edition, which provides a comprehensive explanation of the rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Risk Management and the Rating Process for Investment Companies"; "Understanding Risk Tolerance"; "Rating Members of Investment Groups"; "Assessing Country Risk"; Internationally accepted Liquidity Models for Asian Investment Companies"; "Standardized Treatment of Debt Scales"; and basic knowledge of Operating Leverage."
Founded in 1999, Amtrust Financial Consultants Inc. is a leading provider of investment products in the Pacific Rim.
For further information contact the company.