KUALA LUMPUR, April 10 -- AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to ‘bbb’ from ‘bbb+’ and affirmed the Financial Strength Rating (FSR) of B++ (good) for PT Asuransi Jasa Indonesia (Persero) (Jasindo) Indonesia.
According to a statement, the outlook of the Long-Term ICR has been revised to stable from negative, whilst the outlook of the FSR remains stable.
The ratings reflect Jasindo’s balance sheet strength, which AM Best described as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The downgrade of the Long-Term ICR reflects a revision in AM Best’s assessment of Jasindo’s operating performance to be adequate from strong, following a trend of deteriorating financial results, driven mainly by a decline in underwriting profitability over recent years.
The company reported combined ratio of 106.5 per cent in 2018 whilst unaudited 2019 results indicated a close to technical breakeven position.
At these levels, underwriting performance showed a marked decline as compared with the five-year average combined ratio of 89 per cent between 2013 and 2017.
The decline was attributable largely to a higher combined ratio in Jasindo’s growing retail portfolio, mainly in the credit insurance class.
In addition, earnings were impacted by large premium reserve increases, which were made in 2018 to better reflect earnings pattern of the portfolio.
AM Best views investment income arising from currency market movements to be volatile, although Jasindo has historically benefited from overall profitability.
More details on this ratings at www.ambest.com
-- BERNAMA
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