AM Best Affirms Credit Ratings of Malaysian Reinsurance Berhad

10-Dec-2020 Intellasia | BusinessWire | 10:27 PM Print This Post

SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Malaysian Reinsurance Berhad (Malaysian Re) (Malaysia). The outlook of these Credit Ratings (ratings) is stable.

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

The company’s balance sheet strength is underpinned by its risk-adjusted capitalisation that is expected to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). Capital adequacy has been supported by Malaysian Re’s moderate underwriting leverage and a good quality retrocession panel, as well as from robust growth in shareholders’ equity from internal capital generation and capital raisings. In addition, AM Best considers the company’s investment approach prudent, with the majority of invested assets being placed in cash and deposits, as well as government bonds and good quality corporate fixed-income instruments. A partially offsetting factor is Malaysian Re’s notable exposure to natural catastrophe risks arising from its overseas business, albeit the company has actively managed its peak peril exposures and reduced its participation in catastrophe excess-of-loss programs in recent years.

AM Best views the company’s operating performance as adequate. Malaysian Re has reported operating profits consistently over the past five years (fiscal-years 2016 to 2020), with an average combined ratio of 101% and return on equity ratio of 5%. Whilst recent underwriting results were affected adversely by natural catastrophe losses emanating from the company’s overseas portfolio, this was offset by the continuing favourable technical performance of its domestic portfolio, which benefits from a regulatory cession arrangement. In addition, the company’s investment results, arising from interest and dividend income, have remained a significant contributor to overall profitability during the past five years. However, investment returns are expected to decrease over the near term, as domestic interest rates have fallen amid the COVID-19 environment.

AM Best views Malaysian Re’s business profile as neutral. The company is the largest general reinsurer in Malaysia with a dominant domestic market share. The company benefits from a regulatory domestic cession arrangement, which contributes favourably to the overall premium volumes and technical profitability. However, this arrangement is subject to periodic regulatory review and approval. Following competitive market conditions domestically and overseas, the company has sought to develop non-conventional product offerings and build partnerships to support knowledge transfer, as well as strengthen its risk selection and underwriting guidelines.

AM Best considers the company’s ERM approach to be appropriate given the size and complexity of its operations. Malaysian Re’s risk management framework also is integrated with its parent, MNRB Holdings Berhad, which promotes consistent and proactive risk management practices across the group.

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 Guide to 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 credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


Tran Nhat Trung
Financial Analyst
+65 6303 5019
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]

Myles Gould
Director, Analytics
+65 6303 5020
[email protected]

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
[email protected]


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