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) is stable.
The ratings reflect Jasindo’s balance sheet strength, which A.M. Best categorizes as strong, as well as its favorable operating performance, neutral business profile and appropriate enterprise risk management.
Jasindo’s strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supported by its low underwriting leverage. Being directly owned by the Indonesia government provides Jasindo with access to business from other state-owned enterprises. Jasindo’s overall performance has been strong with profits coming from most business lines. The five-year average combined ratio and operating ratio, standing at 86% and 80%, respectively, compare favorably with the industry averages. Overall operating expenses, while somewhat elevated relative to the prior year, reflect Jasindo’s strategic investments in its retail business segments.
Negative rating factors include Jasindo’s combination of high reinsurance leverage and exposure to lower-rated reinsurers. Although Jasindo’s reinsurance asset leverage has declined, it was still the highest among large Indonesian non-life insurers in 2016 and much higher than the industry average. In addition, a sizable portion of its reinsurance assets is provided by reinsurers that are of lower credit quality, based on international standards.
Positive rating actions could occur if Jasindo can further strengthen its business profile outside its traditional commercial risks segment while maintaining favorable operating performance. Negative rating actions could result from weakening in operating performance or 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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