AM BEST AFFIRMS PHILIPPINE NATIONAL REINSURANCE CORPORATION CREDIT RATINGS

KUALA LUMPUR, July 14 (Bernama) -- Global credit rating agency, AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of National Reinsurance Corporation of the Philippines (Nat Re).

In a statement, AM Best said these credit ratings (ratings), which have a stable outlook, reflected Nat Re’s balance sheet strength, which was assessed as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Nat Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, which remained at the strongest level in 2022.

AM Best views the company’s investment portfolio as having moderate risk. Despite some exposure to corporate bonds and equity investments, the majority of Nat Re’s portfolio is composed of fixed income securities issued by the Philippines government.

The company’s allocation to equity investments has reduced gradually over recent years, with the expectation of continued portfolio de-risking over the medium term. Its balance sheet is sensitive to natural catastrophe exposure, although this risk is partially mitigated through the use of retrocession.

Nat Re’s operating performance is assessed as adequate, with a five-year average return-on-equity ratio of 2.3 per cent (2018-2022). Net profit declined in 2022 compared to the prior year. 

AM Best views Nat Re’s business profile as neutral. The company is the only domestic reinsurer in the Philippines, benefiting from strong relationships with local cedants and access to business through mandatory local cessions.

Nat Re is well-positioned for business opportunities emanating from local government initiatives, this includes its engagement in the design and launch of underwriting facilities in the Philippines market, which enables it to write greater business volumes in excess of the level stipulated by the mandatory cessions.

AM Best considers Nat Re’s ERM approach to be appropriate given the current size and complexity of its operations. The company’s risk management framework and corporate governance capabilities are viewed to have strengthened over recent years.

-- BERNAMA