Moody’s Investors Service has assigned an A2 insurance financial strength rating to Chartis Australia that it says reflects the company’s strong commercial lines business serving corporate and multinational clients.

“The company’s reserving practice has been conservative, leading to consistent favourable development in the past few years,” Moody’s says in a report on the company’s regional operations.

But it says Chartis’ strengths are offset by its “modest market position in Australia”, where the property and casualty market is highly concentrated.

“Because of the competitive nature of the Australian P&C market, Moody’s expects that underwriting margins will be constrained and growth opportunities will be limited.”

The ratings agency says the company’s profitability has been volatile due to losses from catastrophes and financial lines during the global financial crisis, although intercompany reinsurance treaties tempered that volatility.

Moody’s rates all four Chartis group Asia-Pacific insurers at A2 with a stable outlook.

It says the Australia, Singapore, Hong Kong and Taiwan operations contributed about 6.3% of Chartis’ consolidated worldwide premiums last year.