KUALA LUMPUR (Jan 27): A.M. Best Co. affirmed the financial strength rating of A- (excellent) and issuer credit rating of “a-” of MNRB HOLDINGS BHD []’s unit Malaysian Reinsurance Bhd (Malaysian Re). The outlook for both ratings is stable.
It said in a statement on Friday the ratings reflected Malaysian Re’s adequate capitalisation, improving trend in underwriting performance and consistent positive investment income attributed to a prudent approach.
“The ratings also acknowledge Malaysian Re’s leading market position in Malaysia, its key country of exposure,” said A.M. Best, which is the world's oldest and most authoritative insurance rating and information source.
It said Malaysian Re’s risk-based capitalidation had slightly strengthened for fiscal year (FY) 2010 ended March 31, 2011, due to more favourable overall income stemming from an improvement of both the underwriting and investment performance, and greater retention of earnings.
“A.M. Best expects Malaysian Re’s capital position will be maintained at a similar level in the near future due to the composition of the company’s underwriting portfolio, investment strategy and quarterly monitoring of the local risk-based capitalisation,” it said.
It pointed out that due to its national reinsurer background, almost three quarters of Malaysian Re’s business was derived from the Malaysian market.
“The company’s underwriting margin had been in an increasing trend over the past three years, primarily reflecting the better quality of its Malaysian portfolio, while the loss ratios of its overseas portfolio had remained volatile.
“A.M. Best anticipates that losses arising from the Thai flooding will have minimal impact on the company’s underwriting performance and on its risk-based capitalidation for FY 2011 due to management’s focus on the bottom line and strengthening the capital base,” it said.
However, A.M. Best said that partially offsetting rating factors are the keen competition in overseas markets, potential discontinuation of the voluntary cession and the impact in the long run on the company’s profitability.
It said that due to the market competition in Asia Pacific, more capital is required to support Malaysian Re’s growth and expansion to overseas markets.
In addition, if the actual premium growth is higher than projected, the stability of the ratings could be jeopardised if the company's current level of risk-adjusted capitalisation cannot be maintained.
It said in a statement on Friday the ratings reflected Malaysian Re’s adequate capitalisation, improving trend in underwriting performance and consistent positive investment income attributed to a prudent approach.
“The ratings also acknowledge Malaysian Re’s leading market position in Malaysia, its key country of exposure,” said A.M. Best, which is the world's oldest and most authoritative insurance rating and information source.
It said Malaysian Re’s risk-based capitalidation had slightly strengthened for fiscal year (FY) 2010 ended March 31, 2011, due to more favourable overall income stemming from an improvement of both the underwriting and investment performance, and greater retention of earnings.
“A.M. Best expects Malaysian Re’s capital position will be maintained at a similar level in the near future due to the composition of the company’s underwriting portfolio, investment strategy and quarterly monitoring of the local risk-based capitalisation,” it said.
It pointed out that due to its national reinsurer background, almost three quarters of Malaysian Re’s business was derived from the Malaysian market.
“The company’s underwriting margin had been in an increasing trend over the past three years, primarily reflecting the better quality of its Malaysian portfolio, while the loss ratios of its overseas portfolio had remained volatile.
“A.M. Best anticipates that losses arising from the Thai flooding will have minimal impact on the company’s underwriting performance and on its risk-based capitalidation for FY 2011 due to management’s focus on the bottom line and strengthening the capital base,” it said.
However, A.M. Best said that partially offsetting rating factors are the keen competition in overseas markets, potential discontinuation of the voluntary cession and the impact in the long run on the company’s profitability.
It said that due to the market competition in Asia Pacific, more capital is required to support Malaysian Re’s growth and expansion to overseas markets.
In addition, if the actual premium growth is higher than projected, the stability of the ratings could be jeopardised if the company's current level of risk-adjusted capitalisation cannot be maintained.
