KUALA LUMPUR, Dec 16 — Fitch Ratings has affirmed Malaysian Reinsurance Bhd’s (Malaysian Re) insurer financial strength (IFS) rating of ‘A’ (Strong) with a stable outlook.
Fitch Ratings said in a statement that this rating reflects Malaysian Re’s very strong capital buffer and sustained financial performance.
The agency said that the rating also takes into consideration Malaysian Re’s moderate company profile and challenges in managing potential volatility in underwriting performance, especially in its overseas business.
It said Malaysian Re remains well-capitalised, maintaining a ratio of net premiums written to the capital of around 1x in the financial year ended March 2022, within the range for its rating category.
“Financial leverage remained favourably below 20 per cent at the group consolidated level at the financial year-end (FYE) 2022 and the end of the first quarter of 2023,” it said.
The rating agency said Malaysian Re is further tightening underwriting terms and conditions to become more selective and reviewing its retrocession arrangement to ensure adequate risk protection, adding that the reinsurer expects financial performance to recover in 2023.
It said Malaysian Re plans to focus on gradually enhancing selective profitable overseas business while reducing dependence on local businesses for growth.
Fitch said that all local general insurers currently cede 2.5 per cent of their business to the reinsurer.
“This arrangement is typically reviewed regularly and has recently been extended to the end of 2024 by the regulator Bank Negara Malaysia (BNM) from Jan 1, 2022.
“Potential changes to the arrangement, although remote, could affect Malaysian Re’s company profile,” it added.
Fitch also said Malaysian Re’s investment mix is very liquid, with more than 80 per cent of invested assets in cash, deposits and fixed-income instruments in the FYE2022.
“The risky assets ratio – manageable at below 50 per cent at FYE2022 and end of the first quarter of 2023 – is commensurate with the company’s rating category,” it added.
Malaysian Re is Malaysia’s leading reinsurance company and is a wholly owned subsidiary of MNRB Holdings Bhd (MNRB).
Fitch Ratings is a leading global rating agency with dual headquarters in New York and London covering entities in more than 90 countries, including IFS ratings on over 2,000 insurance companies.
— Bernama
