MALAYSIA'S ENERGAS INSURANCE RATED EXCELLENT - AM BEST

KUALA LUMPUR, Feb 23 (Bernama) -- AM Best has affirmed Malaysia’s Energas Insurance (L) Limited (Energas) financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent).

According to AM Best in a statement, the outlook of these credit ratings (ratings) is negative.

The ratings reflect Energas’ balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

In addition, the ratings factor in the neutral impact from the parent, Petroliam Nasional Berhad (PETRONAS), which is the national oil and gas company of Malaysia.

Energas’ balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, which is expected to remain at the strongest level over the medium term.

The company’s investment portfolio was viewed by AM Best as conservative, with a majority of investments allocated to cash and deposits, and the remainder invested in good quality government and corporate bonds.

Capital requirements arising from underwriting risks are viewed to be low given the company’s low net underwriting leverage, though the accumulation of high severity losses from multiple policies may still lead to moderate balance sheet volatility.

AM Best views Energas’ operating performance as strong, supported by its five-year average combined ratio of 68.4 per cent (2018-2022). The company’s net underwriting margins have historically benefitted from favourable reinsurance commission income and low management expenses relative to net earned premium.

The credit rating agency considers the company’s business profile as neutral. As a single-parent captive to PETRONAS, Energas benefits from business access to the group’s insurance risks.

However, its underwriting portfolio shows concentration by line of business and geography, with a significant focus on upstream and downstream energy risks located in Malaysia.

-- BERNAMA