KUALA LUMPUR, March 4 (Bernama) -- US-based rating agency A.M. Best has
affirmed the financial strength rating of Petronas' sole captive
insurance company, Energas Insurance (L) Ltd, at A (Excellent) and the
issuer credit rating at "a".
The rating agency has also put the outlook on both ratings as stable.
A.M. Best in a statement today said the rating affirmation reflects the
company's strong risk-adjusted capitalisation, continuing favourable
operating performance and comprehensive reinsurance programme.
"The ratings also acknowledge its strategic position as the sole captive
insurance company for Petronas, the national oil and gas company of
Malaysia, which is wholly-owned by the Government of Malaysia.
"Energas' role is an integral component in the overall risk management programme of the group," it said.
It said Energas' capital and surplus have been growing steadily in the
past five years due to its favourable underwriting results while the
company's financial strength is further underpinned by its retention of
earnings, risk selection and reinsurance programme.
In addition, Energas has maintained a prudent investment portfolio of high liquidity, it said.
A.M. Best said Energas maintains a comprehensive reinsurance programme
with a strong panel of reinsurers, which is expected to continue to
protect its capitalisation in the event of large losses.
However, it said, partially offsetting these positive rating factors are
Energas' potential volatility of underwriting performance and
capitalisation due to its captive business nature and higher risk
retention since 2013.
Nevertheless, it said, Energas is well positioned at its current rating level.
"Negative rating actions could occur if there is material deterioration
in operating performance, resulting in a material decline in its
risk-adjusted capitalisation level.
"Alternatively, negative rating pressure might arise if there is a
significant downward movement of Petronas's credit profile," it added.
-- BERNAMA
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