KUALA LUMPUR, Dec 12 (Bernama) -- Global credit rating agency, AM Best has affirmed the financial strength rating of A (excellent) and the long-term issuer credit rating of “a” (excellent) of Malaysia’s Lonpac Insurance Bhd (Lonpac).
In a statement, AM Best said these credit ratings (ratings) have a stable outlook, which reflected Lonpac’s balance sheet strength, was assessed as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Lonpac’s risk-adjusted capitalisation was at the strongest level at year-end 2023, as measured by Best’s Capital Adequacy Ratio, and is expected to remain at this level over the near to medium term. During the past five years (2019-2023), the company has demonstrated strong capital growth from retained earnings, taking into account the high dividend payout ratio over this period.
In addition, Lonpac has a generally conservative investment portfolio comprising cash, bonds and debt-focused unit trust funds. However, AM Best considers the company to have a moderate dependence on third-party reinsurance to support the underwriting of large-limit risks and manage its catastrophe exposures.
In December this year, Public Bank Berhad (PBB) acquired a 44.15 per cent stake in LPI Capital Bhd (LPI), Lonpac’s ultimate parent, from the estate of the late founder, Tan Sri Teh Hong Piow and Consolidated Teh Holdings Sdn Bhd, making PBB the largest shareholder of LPI. It is AM Best’s view that the transfer of shares will have a neutral impact on the credit rating fundamentals of Lonpac.
Lonpac’s operating performance is strong, supported by robust underwriting results, particularly in the property and bond sectors. Low net loss experience and favorable reinsurance commission income in recent periods have supported strong technical profitability.
Whilst AM Best expects the company to maintain its strong operating performance over the medium term, the elevated cost of reinsurance, as well as the ongoing phased liberalisation of motor and fire insurance pricing in Malaysia, may constrain underwriting margins over the near to medium term.
AM Best views Lonpac’s business profile as neutral, as it is a medium-size non-life insurer in Malaysia, with a market share of approximately seven per cent, based on 2023 gross written premium. The company’s underwriting portfolio is diversified moderately by line of business, albeit with the majority of business originating from Malaysia.
Lonpac benefits from a long-standing relationship with Public Bank Berhad, which provides the company with preferential access to profitable property business through the banking channel.
-- BERNAMA
No comments:
Post a Comment