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FOR IMMEDIATE RELEASE
HONG KONG - MARCH 28, 2014 02:13 PM (EDT)
A.M. Best has affirmed the financial strength rating of A (Excellent) and issuer credit rating of "a" of Energas Insurance (L) Limited (Energas) (Malaysia). The outlook for both ratings is stable.
The rating affirmations reflect the company's strong risk-adjusted capitalization, continuing favorable operating performance and comprehensive reinsurance program. The ratings also acknowledge its strategic position as the sole captive insurance company for Petroliam Nasional Berhad (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 program of the group.
Energas' capital and surplus has been growing steadily in the past five years due to its favorable underwriting results. The company's financial strength is further underpinned by its retention of earnings, risk selection and reinsurance program. In addition, Energas has maintained a prudent investment portfolio of high liquidity.
Energas maintains a comprehensive reinsurance program with a strong panel of reinsurers, which is expected to continue to protect its capitalization in the event of large losses.
Partially offsetting these positive rating factors are Energas' potential volatility of underwriting performance and capitalization due to its captive business nature and higher risk retention since 2013.
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 capitalization level. Alternatively, negative rating pressure might arise if there is a significant downward movement of Petronas's credit profile.
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.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This rating announcement has been issued by A.M. Best Asia-Pacific Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.