SINGAPORE--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Malaysian Reinsurance Berhad (Malaysian Re) (Malaysia). The outlook for both ratings is positive.
The ratings consider Malaysian Re’s strong operating performance and excellent risk-adjusted capitalization. The company’s overall operating performance has been strong and balanced. Its combined and operating ratios have mostly moved within a narrow, favorable range in the five years prior to March 2014. This has supported the company’s steady capital growth and risk-adjusted capitalization.
Offsetting rating factors include risk to the company’s business profile in its domestic market. The company benefits from a regulated cession arrangement (voluntary cessions) in Malaysia’s non-life market, which contributes significantly to its premium revenue and overall profits. In addition, the company has had to deal with increased risk retentions and increased cessions to offshore reinsurers among domestic direct insurers. In response, the company has grown its overseas reinsurance business, which has yet to show steady overall profitability.
Positive rating actions could occur if Malaysian Re demonstrates an ability to sustain its overall profitability ratios as the volume of voluntary cessions tapers off and its overseas business shows sustained profitability. Negative rating actions could result from a sustained deterioration of the company’s operating performance.
The methodology used in determining these interactive ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Catastrophe Analysis in A.M. Best Ratings
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding Universal BCAR
- Evaluating Country Risk
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.
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