KUALA LUMPUR, May 17 (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 PT Asuransi Tokio Marine Indonesia (TMI).
In a statement, AM Best said these credit ratings (ratings) which have a stable outlook reflected TMI’s balance sheet strength, was assessed as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
In addition, the ratings factor in rating enhancement from Tokio Marine & Nichido Fire Insurance Co Ltd, which is the main insurance operating entity of Tokio Marine Holdings Inc (TMH).
TMI’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), has deteriorated to the very strong level as at year-end 2023 while the company’s exposure to reinsurance credit risk has risen significantly in 2023 given recent large claims that were ceded to domestic (re)insurance counterparties of lower credit quality.
Notwithstanding this, capital adequacy is projected to recover following reinsurance settlements over the near to medium term in which the company has demonstrated strong internal capital generation, with average annual shareholders’ equity growth of 11.5 per cent over the past five years (2019-2023).
Additionally, the company has a conservative investment portfolio composed mainly of government bonds, cash and deposits.
TMI’s operating performance was assessed as strong, evidenced by a five-year average combined ratio of 85 per cent and return-on-equity ratio of 18 per cent (2019-2023), as well as its robust underwriting performance in 2023 with a combined ratio of 84 per cent.
The credit rating agency views the company’s business profile as limited and its portfolio to be diversified moderately by line of business with key lines including fire, marine and motor insurance, although with a geographic concentration in Indonesia.
TMI benefits from preferential access to Japanese interest abroad (JIA) related risks in Indonesia given its affiliation and common branding with TMH, having also shown significant growth in non-JIA-related risks over time, particularly for marine cargo.
-- BERNAMA
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