A.M. Best has affirmed the financial strength rating of B++ (Good) and issuer credit rating of “bbb+” of Malayan Insurance Co., Inc. (MICO) (Philippines). The outlook for both ratings is stable.
The ratings reflect MICO’s solid risk-adjusted capitalization, prominent business profile in the Philippine non-life insurance market and its consistently favorable investment performance.
MICO’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains solid, despite the company’s losses from the several catastrophe events that occurred in the Philippines in 2013 and the Thailand flooding in 2011.
With over 80 years of operation, MICO has established a strong brand name in the Philippines. The company has maintained the largest non-life insurer position in the Philippines in terms of direct premium written for over four decades. The investment portfolio has been an important income source to MICO, as the company has consistently posted satisfactory investment results to offset the underwriting deficit and deliver a net profit every year in the past five years. It is expected that investment activities will continue to make a significant contribution to the company’s bottom line going forward.
Offsetting rating factors include MICO’s unfavorable underwriting performance, primarily due to its high operating expenses relative to regional peers. In recent years, the company’s underwriting results were also impacted by losses from the frequent catastrophe events that occurred in the Philippines and the Asia Pacific region.
Future upward rating actions could occur if MICO can demonstrate a significant improvement in its underwriting performance through more stringent risk selection, improved pricing adequacy and higher operational efficiency. Conversely, downward rating actions could occur if the company’s risk-adjusted capitalization declines materially as a result of the poor underwriting performance or a decline in its invested asset value.
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. For more information, visit www.ambest.com.
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Yanwei You, +852-2827-3421
Jeff Yeung, +852-2827-3413
Rachelle Morrow, +(1) 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations