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FOR IMMEDIATE RELEASE
SINGAPORE - MARCH 27, 2015 12:15 PM (EDT)
A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of "bbb+" of PT Asuransi Jasa Indonesia (Persero) (Jasindo) (Indonesia). The outlook for both ratings is stable.
The ratings consider Jasindo's supportive balance sheet strength, continued strong financial performance and its status as one of the leading non-life insurers in Indonesia. Supported by positive underwriting and investment results, the company enjoyed strong profitability with little volatility to net profitability ratios between 2010 to September 2014, while capital grew about 80% over the same period.
Jasindo has a market share of 9% in the profitable and growing Indonesian non-life market. Its state-owned background supports its position as a leading provider of non-life covers to state- owned enterprises. Going forward, Jasindo intends to grow its retail portfolio, especially by exploring bancassurance opportunities with state-owned banks, which, if profitable, could help to balance out its heavy commercial exposures and help to reduce reliance on reinsurance.
Negative rating factors include Jasindo's exposure to catastrophe risk due to its large commercial and industrial property business and reinsurance asset credit risk. The company uses reinsurance to manage its catastrophe exposure, placing more than half of its property reinsurance with reinsurers that are of high credit quality. However, a significant portion of Jasindo's reinsurance is also provided by reinsurers that have low credit quality by international standards. The impact of this on Jasindo's risk-adjusted capitalization is increased by its higher-than-average reinsurance asset leverage (reinsurance assets to capital).
Positive rating movements are unlikely at present.
Negative rating movement could occur if Jasindo's risk-adjusted capitalization declines due to higher-than-expected reinsurance credit risk.
The methodology used in determining these interactive ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center .
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.