KUALA LUMPUR: A.M. Best has affirmed the Financial Strength Rating of A- (excellent) and the Long-Term Issuer Credit Rating of ‘a-’ of Malaysian Reinsurance Bhd (Malaysian Re) Malaysia.
The global rating agency focused on the insurance industry said in a statement, the outlook of these credit ratings is stable.
The ratings reflect Malaysian Re’s balance sheet strength, which A.M. Best categorised as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
According to the statement, the company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supported by low underwriting leverage and a conservative investment portfolio. The insurance company operating performance is supported by a steady stream of investment income, which has mitigated fluctuations in its underwriting results.
Malaysian Re also benefited from a regulated cession arrangement in Malaysia’s non-life market. While these cessions contribute significantly to its premium revenue and overall profits, volumes have declined following regulatory rate reductions.
Additionally, increasing consolidation among local insurers has lowered the demand for reinsurance capacity. In response, Malaysian Re has grown its overseas reinsurance business, which carries more volatility and lower profitability compared with its domestic portfolio. –Bernama