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 Malayan Insurance Co., Inc. (MICO) (Philippines). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect MICO’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
MICO’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is very strong and supported by low underwriting leverage. While the company has a large amount of reinsurance assets, it manages credit risk by maintaining a panel of strongly rated reinsurance counterparties. Management also expects to reduce the amount of reinsurance recoverables substantially in 2018. In addition, MICO has a strong presence in the corporate segment of the Philippines’ non-life market and is the country’s largest insurer based on premium and second largest in terms of capital and surplus.
An offsetting rating factor is the company’s unfavorable five-year underwriting results, driven by several large fire losses and catastrophes and by competitive conditions in the motor segment. While overall operating results have been positive, these results have been driven primarily by investment earnings.
Another concern is MICO’s concentration risk from its equity investments, which are relatively large compared with its overall invested assets and capital base. This risk exposes the company’s capital and surplus to adverse movements in equity prices.
Positive rating actions are not anticipated. Negative rating actions could result from material deterioration in MICO’s risk-adjusted capitalization due to unexpectedly large movements in the fair market value of its reserves.
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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