KUALA LUMPUR, Dec 9 (Bernama) -- AM Best has affirmed Etiqa General Insurance Bhd’s (EGIB) financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent).
In a statement, it said the ratings -- which have a stable outlook -- reflected EGIB’s balance sheet strength, which was assessed as strong, as well as its operating performance (strong), business profile (neutral) and enterprise risk management (appropriate).
AM Best said the ratings also factored in a neutral impact from the company’s ultimate majority ownership by Malayan Banking Bhd (Maybank).
“EGIB’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which was at the strongest level at end-2021, as measured by Best’s Capital Adequacy Ratio, and is expected to remain at this level over the near- to medium-term,” it said.
AM Best views the company as having a moderate-risk investment strategy as it holds a combination of low-risk assets, including cash, deposits and bonds, albeit with notable exposure to higher-risk assets of equities and real estate with both representing approximately 23 per cent of invested assets at end-2021.
“In addition, the company has high reinsurance usage and dependence, with a net retention ratio of 33 per cent in 2021.
“As a result, the company’s reinsurance recoverables are a large balance sheet item, equal to three times its shareholders’ equity at the end of 2021,” it said.
AM Best said it assessed EGIB’s operating performance as strong, with a five-year average combined ratio of approximately 87 per cent (2017-2021).
“Low net loss experience in the company’s core business lines of fire and personal accident, as well as favourable reinsurance commission income from ceded risks, have been the key drivers of technical profitability over recent years.
“Overall earnings have been supported by favourable underwriting performance and consistent investment income,” it added.
-- BERNAMA
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