KUALA LUMPUR, Jan 9 (Bernama) -- Global credit rating agency, AM Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent) of Malaysian Reinsurance Bhd (Malaysian Re).
In a statement, AM Best said the credit ratings, which have a stable outlook, reflected Malaysian Re’s balance sheet strength, which was assessed as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Malaysian Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, which is expected to remain at the strongest level over the medium term.
The credit rating agency viewed the company’s investment portfolio to be generally conservative, whereby the majority of investments are allocated to term deposits, government bonds and good quality corporate bonds.
Additionally, the company benefits from good financial flexibility as demonstrated by its recent subordinated debt issuances in 2022, and historical capital support from MNRB Holdings Bhd.
“The company’s operating performance is assessed as adequate, as evidenced by a five-year average return-on-equity ratio of 5.6 per cent between financial years 2018 and 2022.
“Malaysian Re’s underwriting performance was negatively impacted in the financial year ending March 31, 2022, mainly by its exposure to Malaysian and European floods, as well as other large losses in 2021,” it added.
While the company’s investment income declined in financial year 2022 as a result of lower interest income and unrealised losses on equity investments including unit trusts, it remains a positive contributor to overall earnings.
Malaysian Re is the largest non-life reinsurer in Malaysia, with a dominant domestic market share, benefitting from a regulatory domestic cession arrangement, which provides it with access to a steady stream of profitable domestic business.
Future product and distribution channel diversification is expected to be supported by strategic expansion into non-traditional products and specialty lines, as part of the company's ongoing business remodelling programme.
-- BERNAMA
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