AM Best Affirms Credit Ratings of Energas Insurance (L) Limited

SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Energas Insurance (L) Limited (ENERGAS) (Malaysia). The outlook of these Credit Ratings (ratings) is negative.

The ratings reflect ENERGAS’ balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. In addition, the ratings factor in a neutral impact from the parent company, Petroliam Nasional Berhad (PETRONAS), which is the national oil and gas company of Malaysia.

The negative outlooks reflect pressure on ENERGAS’s strong operating performance assessment. The company’s underwriting performance has shown a trend of deterioration that was exacerbated by heightened claims frequency. Nevertheless, ENERGAS’s underwriting performance has shown an improvement in the first nine months of 2024, supported by favourable loss experience and premium rate increases. Notwithstanding ongoing remedial measures, the effectiveness of these actions remains subject to execution risk.

ENERGAS’ balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best views ENERGAS’ investment portfolio as conservative, with a majority of its investments allocated to cash and deposits, and the remainder invested in good quality government and corporate bonds. Capital requirements arising from underwriting risks are viewed by AM Best to be low given the company’s low net underwriting leverage. Potential accumulation of high severity losses from multiple policies may lead to balance sheet volatility, although the risk is mitigated by reinsurance.

AM Best considers ENERGAS’ business profile to be neutral. As a single-parent captive to PETRONAS, ENERGAS benefits from business access to the group’s insurance risks. However, the company’s underwriting portfolio shows concentration by line of business and geography, with a significant focus on upstream and downstream energy risks located in Malaysia.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM 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 see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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