Saturday, May 8, 2021

MALAYSIA’S ENERGAS CREDIT RATINGS AFFIRMED EXCELLENT, SAYS AM BEST

KUALA LUMPUR, May 7 (Bernama) -- AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of ‘a’ of Energas Insurance (L) Limited (Energas) Malaysia.

According to a statement from the global credit rating agency, the outlook of these Credit Ratings (ratings) is stable.

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 a neutral impact from the company’s 100 per cent ownership and integration with Petroliam Nasional Bhd (Petronas).

The company’s risk-adjusted capitalisation remains at strongest level, as measured by Best’s Capital Adequacy Ratio, supported by Energas’ low underwriting leverage, conservative investment strategy and strong liquidity.

Investment assets consist of mainly cash and deposits held at well-established domestic financial institutions, and investment-grade debt securities. 

An offsetting factor is Energas’ high exposure to low frequency-high severity loss events given the nature of the company’s energy portfolio.

Nonetheless, the significant underwriting risks are managed through the company’s low net retention and comprehensive reinsurance programmes, which are placed with high quality reinsurers.

Despite the company’s history of volatile loss ratios, Energas has demonstrated a track record of strong underwriting performance as demonstrated by a favourable five-year average combined ratio of 53 per cent (2016-2020). 

As a single-parent captive of Petronas, Energas benefits from a direct access to the group and a comprehensive knowledge of its insurance risks, which effectively facilitate the company’s underwriting activities.

On the back of the gradual recovery of the oil and gas industry, AM Best expects Energas to grow its premium volume, driven by the group’s higher planned capital expenditures, as well as potential rise in premium rates for upstream and downstream business.

More details at www.ambest.com.

-- BERNAMA

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