KUALA LUMPUR, Nov 17 (Bernama) -- Global credit rating agency, AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of ‘a-’ (Excellent) to Etiqa General Insurance Berhad (EGIB) Malaysia.
The outlook assigned to these Credit Ratings (ratings) is stable, according to a statement.
The ratings reflect EGIB’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM), also factoring in a neutral impact from the company’s ultimate majority ownership by Malayan Banking Berhad (Maybank group).
EGIB’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which is expected to remain at the strongest level over the medium term.
AM Best views the company as having a moderate risk investment strategy with it holding a combination of low-risk assets, including cash, deposits and fixed-income instruments.
In addition, the company exhibits high reinsurance usage and dependence, with a net retention ratio of 37 per cent in 2020. The company’s reinsurance recoverables are also a large balance sheet item, equivalent to three times its shareholders’ equity at the end of 2020.
EGIB’s operating performance is assessed as strong, with a five-year average non-life operating ratio of approximately 69 per cent (2016-2020).
Overall earnings have been supported by favourable underwriting performance and consistent investment income. Prospectively, AM Best expects a challenging operating environment arising from the COVID-19 pandemic and the continued phased liberalisation of motor and fire insurance business in Malaysia.
Nonetheless, EGIB continues to enhance its pricing and risk selection capabilities, as well as strengthen its distribution and product design, which are expected to support continued strong underwriting and operating performance.
The business profile assessment of neutral reflects EGIB’s position as the sixth largest general insurer in Malaysia with a market share of over seven per cent, based on 2020 gross direct written premium.
For more information, visit www.ambest.com.
-- BERNAMA
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