SINGAPORE--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” of PT Asuransi Jasa Indonesia (Persero) (Jasindo) (Indonesia). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Jasindo’s adequate risk-adjusted capitalization, strong operating performance and good profile in Indonesia’s non-life market.
Jasindo’s adequate risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supported by its low underwriting leverage. Jasindo benefits from a strong presence in Indonesia’s non-life market and ranks second in terms of gross premium written. The company also is a leading player in the non-life market’s commercial segment. Being directly owned by the Indonesian government helps Jasindo access business from state-owned enterprises. At the same time, the company has built a sizable retail portfolio, which accounted for 28% of its gross premiums in 2015. Jasindo’s overall performance has been strong. Combined ratios remained below 90%, while pretax margins were more than 20% in the five years ending in 2016.
Negative rating factors include Jasindo’s combination of high reinsurance leverage and exposure to lower-rated reinsurers. Jasindo’s reinsurance asset leverage has declined, yet was still the highest among large Indonesian non-life insurers in 2015. While reinsurance protection is provided largely by highly rated counterparties, a sizable portion is provided by reinsurers that are of lower credit quality based on international standards.
A.M. Best does not anticipate positive rating momentum. Negative rating actions could result from deterioration in operating performance or a material decline in Jasindo’s risk-adjusted capitalization as a result of higher-than-expected reinsurance asset leverage or lower-than-expected reinsurance asset quality.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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