KUALA LUMPUR, Dec 23 (Bernama) -- AM Best has revised the outlook of PT Asuransi Tugu Pratama Indonesia Tbk (Tugu) to negative from stable while affirming its financial strength rating of A- (excellent) and the long-term issuer credit rating of “a-” (excellent).
The rating agency said the credit ratings reflected the Indonesian insurer’s balance sheet strength, which it assessed as very strong, as well as its strong operating performance, neutral business profile, and appropriate enterprise risk management.
“The ratings also factor in a neutral impact from the company’s ultimate majority parent, PT Pertamina (Persero), a state-owned energy company in Indonesia,” AM Best said in a statement.
It said the revision of the outlook to negative from stable reflected the trend of deterioration in Tugu’s underwriting performance over recent periods.
“We expect the overall operating performance to remain constrained over the near to medium term,” it said
The rating agency said Tugu’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, which remains at the strongest level.
“Capital adequacy is supported by its low net underwriting leverage and ongoing internal capital generation while its investment portfolio as assessed by AM Best to be of moderate risk and generally diversified,” it said.
AM Best said Tugu’s operating performance was also regarded as strong, driven by profitable business from its parent company, Pertamina, which continues to be the key contributor.
“However, underwriting performance has deteriorated in the two most recent financial years, accompanied by an increasing trend of operating expense ratio, and underwriting losses at its reinsurance subsidiary, PT Tugu Reasuransi Indonesia (Tugu Re).
“Meanwhile, pre-tax profits increased 15 per cent in the first nine months of 2022 compared with the same period in 2021 supported by higher investment income,” it said.
Tugu is a large insurance group in Indonesia, ranked number five by market share in 2021 in the domestic general insurance market, and additionally writes reinsurance through Tugu Re.
-- BERNAMA
No comments:
Post a Comment