KUALA LUMPUR, Oct 1 (Bernama) -- A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (excellent) and the Long-Term Issuer Credit Rating of ‘a-’ of PT Asuransi Tugu Pratama Indonesia, Tbk (TPI) Indonesia.
The negative outlooks reflect rising concern over the effectiveness of TPI’s enterprise risk management framework (ERM) following the consolidation of its reinsurance business.
The global rating agency said in a statement that with the recent consolidation of PT Tugu Reasuransi Indonesia, reinsurance business represents a significant portion of overall premiums written.
However, an effective consolidated ERM framework that also includes the reinsurance business is only at an early stage, raising the risk of unexpected volatility.
Although overall underwriting margins remained good in the first half of 2018, these were reduced by unfavorable results from the reinsurance business. In addition, overall results have been affected by investment and currency volatility.
According to A.M. Best, the negative rating action could result from a significant deterioration in operating performance or unexpected volatility due to gaps in ERM.
TPI’s risk-adjusted capitalization remains solid, supported by relatively low gross and net underwriting leverage and conservative investment asset allocations, as well as the quality and diversity of its reinsurance panel.
Its capital position is among the largest in Indonesia’s non-life market. TPI has a track record of strong operating performance supported by underwriting and investment results. More details about the rating on www.ambest.com
--BERNAMA
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