2013-10-10 18:01:03 -
A.M. Best Asia-Pacific Limited has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Lonpac Insurance Bhd (Lonpac) (Malaysia). The outlook of both ratings is stable.
The rating affirmations reflect Lonpac’s adequate risk-adjusted capitalization, continuing favorable operating performance and investment income as well as its good market presence in Malaysia.
Lonpac’s risk-adjusted capitalization level, as measured by Best’s Capital Adequacy Ratio (BCAR), is supportive of its current ratings.
Lonpac has been able to achieve favorable operating income over the past five years, with its overall five-year average combined ratio remaining below 75% as a result of the company’s strategy to strengthen its profitable insurance book, stabilize its underwriting expense and maintain positive investment income.
Lonpac’s market presence
remains solid. The company was ranked the fifth-largest non-life insurer in Malaysia, as measured by gross direct premium, capturing a market share of approximately 6% in 2012. Lonpac’s broad distribution channels, with a strong agency force and bancassurance networks, have underpinned its leading position in the Malaysian non-life market.
Offsetting these positive rating factors are the continuous pressure on Lonpac’s capital position and the competitive environment of its core operating market.
Lonpac’s commitment to deliver high dividends to its shareholders and its strategy to gain a more significant market presence may pressure the company’s capitalization. With the introduction of the Malaysian liberalization policy to the financial sector, it is expected that players with stronger capitalization and pressure to lower premium rates will intensify competition.
Factors leading to positive rating movements include Lonpac’s continuing improving risk-adjusted capitalization and operating results.
Negative rating actions could occur if Lonpac’s operating performance deteriorates and/or there is a substantial decline in its risk-based capitalization level.
The methodology used in determining these interactive 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. 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 ..
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
A.M. Best Asia-Pacific Limited is a subsidiary of A.M. Best Company. 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 Asia-Pacific LimitedAngela ChowAssociate
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