2013-12-11 16:10:04 -
A.M. Best Asia-Pacific Limited has revised the outlook to positive from stable and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Malaysian Reinsurance Berhad (Malaysian Re) (Malaysia).
The ratings reflect Malaysian Re’s strengthened risk-adjusted capitalization, consistently favorable operating performance and well-established presence in the Malaysian reinsurance market.
Malaysian Re has recorded healthy growth in its capital and surplus over the past five years, largely due to its profitable operating results.
The company’s risk-adjusted capitalization has also strengthened, as measured by its regulatory capital adequacy ratio (CAR) and Best’s Capital Adequacy Ratio (BCAR). Malaysian Re has consistently posted positive earnings over the past 10 years, as a result of its robust performance in both underwriting and
investment activities. Despite the losses from Thailand flooding, underwriting results have improved in the past three years. Malaysian Re has established a dominant position in the domestic reinsurance market during its 40 years of operation. The company has captured around 60% of the reinsurance accepted premium in Malaysia over the past five years alone.
Offsetting rating factors include potential termination of voluntary cession (VC) arrangement in the near term and the competitive regional reinsurance market.
Although Malaysian Re is less reliant on VC business than before, the potential termination of this business in 2016 still exerts some pressure on the company’s premium income. With recent consolidation activities and the emergence of foreign insurers in the Malaysian non-life market, it has become more difficult for Malaysian Re to secure business from the market players. Also, given the competitive landscape of the regional reinsurance sector, it remains a challenge for Malaysian Re to further enhance its presence in overseas markets.
Future positive rating actions could occur if Malaysian Re is able to further strengthen its business profile in the regional reinsurance market while maintaining its sound risk-based capitalization and strong operating results. Conversely, downward rating pressure could occur if there is a material deterioration in the company’s operating performance or risk-adjusted 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 LimitedYanwei You, +852-2827-3421Associate
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