AM Best


AM Best Revises Issuer Credit Rating Outlook to Negative for Malayan Insurance Co., Inc.


CONTACTS:

Tran Nhat Trung
Financial Analyst
+65 6303 5019
trung.tran@ambest.com

Myles Gould
Associate Director, Analytics
+65 6303 5020
myles.gould@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

SINGAPORE - APRIL 18, 2019 12:35 PM (EDT)
AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb+” of Malayan Insurance Co., Inc. (Malayan) (Philippines). The outlook of the FSR remains stable.

The Credit Ratings (ratings) reflect Malayan’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The revision of the Long-Term ICR outlook to negative results from volatility beyond AM Best’s prior expectation and a fall in Malayan’s risk-adjusted capitalization during 2018, as measured by Best’s Capital Adequacy Ratio (BCAR). The decline was driven largely by unfavorable fair value movements on the company’s concentrated equity investment holdings, which led to a drop in reported shareholders’ equity. In addition, while being scaled down gradually, Malayan’s large volume of reinsurance recoverables, as well as its projected underwriting growth, are expected to place continued pressure on capital adequacy over the medium term.

Malayan’s underwriting portfolio is dominated by property risks, which over recent years have underperformed and created volatility in overall technical performance. The company was affected adversely by multiple catastrophes and large loss events that resulted in combined ratios exceeding 100% in 2017 and 2018. AM Best expects Malayan to implement measures to improve its underwriting performance going forward. Despite unfavorable underwriting performance, operating results have been supplemented by steady investment income to enable the reporting of pre-tax profits over the past five years.

Malayan is the largest non-life insurer in the Philippines, with an approximate 11% market share based on gross written premiums in 2017. The company benefits from its strong brand name and affiliation with the Yuchengco group of companies, which is one of the largest conglomerates in the Philippines.

Malayan’s ERM is at an emerging stage of development; however, AM Best considers it as appropriate given the current size and complexity of the company’s operations. Malayan continues to enhance its risk management framework and capabilities surrounding monitoring and control of key risks.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM 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 see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry.


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