AM Best has affirmed the Financial Strength of B (Fair) and the Long-Term Credit Rating of “bb+” (Fair) of
The ratings reflect the strength of Quest’s paper, which AM Best considers to be adequate, as well as its performance, limited business history and corporate governance (ERM). In addition, the votes give the company neutral power from the majority of the company’s shareholders
Quest’s paper’s robustness assessment is driven by the most robust financial reform as of 2022, as measured by Best’s Capital Adequacy Ratio (BCAR). The risk of corporate underwriting has increased significantly in recent years due to the high growth rate. However, this was partially mitigated by the improvement of its financial position after the sale of fixed assets in the informal business in 2021. The current distribution of cash, long-term deposits and related loans is expected to remain unchanged in the short term. time. Factors that strengthen balance sheets include the company’s small investments, which increase the risk-adjusted capital’s sensitivity to pressures and changes in future operations, business growth and dividend returns.
AM Best assesses Quest’s performance as adequate and identifies its inconsistencies. The company has a five-year compound interest rate of 18.8% (fiscal years 2018 to 2022) and the total earnings during this period reflect a combination of strong operating performance and good investment returns. The company’s write-up has improved over the past two years mainly due to the company’s reduced expenses despite its losses. The improved interest rate was mainly driven by the growth of the economy, as well as lower costs due to changes in the product mix and the nature of long-term investments as they matured. However, the recent rapid growth of the business in highly profitable corporate insurance (CVI) has resulted in loss risk; this is expected to continue to drive potential changes in its performance in the short term.
A closer look at Quest’s business shows its presence in the small market and the stability of the products it offers, especially as providers of CVI and mechanical damage insurance (MBI) in
AM Best evaluates Quest’s ERM as appropriate based on the size and complexity of the company’s operations. After recent business growth, the company is at high risk of write-offs and executions. However, this risk has been mitigated to some extent due to a thorough review of the underwriting process, as well as a careful pricing and booking process with the help of third-party experts. AM Best considers Quest’s risk management capabilities to be well worth the risk, and expects continued growth as the company expands its portfolio in the short term.
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Source: AM Best