2013-03-22 16:31:56 -

A.M. Best Asia-Pacific Limited has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of Energas Insurance (L) Limited (Energas) (Malaysia). The outlook for both ratings is stable.

The ratings reflect Energas' strong capitalization in 2012, consistent favorable and improving financial performance, comprehensive reinsurance program and sound liquidity. The ratings also recognize the strategic role of Energas as the sole captive of Petroliam Nasional Berhad (Petronas) and as an integral component in the overall risk management of the group.

The strong capital position of Energas is a result of its retention of earnings and capital injections from Petronas in 2007 and 2008. The company’s financial strength also is underpinned by its consistent underwriting and investment profits and

a comprehensive reinsurance program.

Energas allocates around two-thirds of its assets in cash and cash equivalents, providing a high level of liquidity and minimum investment risk exposure. The reinsurance arrangement provides a very good level of protection and is placed with a strong panel of reinsurers.

Partially offsetting these positive rating factors are Energas' relatively small underwriting portfolio and narrow scope of risk resulting in an unstable underwriting performance. Another offsetting rating factor is the company’s greater risk retention. Energas has tripled its net retention in 2013, which could lead to a higher volatility in its earnings. The financial strength of Energas is likely to be adequate to sustain a higher retention of risk.

Any rating movement could occur on Energas’ ratings if there were a change in Petronas' financial strength. Another key rating driver that could result in negative rating actions is a material deterioration of Energas’ capitalization that does not support the current ratings.

The methodology used in determining these 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. Additional key criteria utilized include: “Understanding Universal BCAR”; “Catastrophe Analysis in A.M.

Best Ratings”; “Alternative Risk Transfer (ART)”; “Evaluating Non-Insurance Ultimate Parents”; “Evaluating Country Risk”; and “Risk Management and the Rating Process for Insurance Companies.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww .. .


A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww .. .

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A.M. Best Co.Arina Tek, +852-2827-3424Senior
Financial Analyst arina.tek@ambest.com : mailto:arina.tek@ambest.com orMoungmo

Lee, +852-2827-3402General Manager, Analytics moungmo.lee@ambest.com : mailto:moungmo.lee@ambest.com orRachelle
Morrow, +(1) 908-439-2200, ext. 5378Senior Manager, Public
Relations rachelle.morrow@ambest.com : mailto:rachelle.morrow@ambest.com orJim

Peavy, +(1) 908-439-2200, ext. 5644Assistant Vice
President, Public Relations james.peavy@ambest.com : mailto:james.peavy@ambest.com