SINGAPORE--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of PT Asuransi Tokio Marine Indonesia (TMI) (Indonesia). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect TMI’s balance sheet strength, which A.M. Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also recognize the implicit and explicit support provided by the company’s ultimate parent, Tokio Marine Holdings, Inc.
TMI is a joint venture between Tokio Marine Asia Pte. Ltd. and PT Asuransi Jasa Indonesia (Persero), which have 60% and 40% shareholdings, respectively. While a large number of TMI’s clients are Japanese companies operating in Indonesia, TMI has a small but growing segment of Indonesian clients.
TMI’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supported by the company’s low net underwriting leverage. The company’s investment portfolio is conservative, with most investments placed in cash and government bonds.
In terms of performance, TMI has produced favorable underwriting results, especially within its Japanese-related risks. Investment income, mostly from cash deposits and government bonds, also has supported the company’s results.
An offsetting rating factor is an expected upward trend in the company’s expense ratio, partly due to company’s efforts to expand its non-Japanese business, which typically incurs higher commission expenses. In addition, due to Indonesia’s regulations, a portion of TMI’s reinsurance coverage is provided by domestic counterparties, which are generally of lower credit quality based on international standards.
The company is well-positioned at its current rating level. Negative rating actions may arise from material deterioration in operating performance or risk-adjusted capitalization.
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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