AM Best Affirms Credit Ratings, Assigns National Scale Rating To Philippines’ Nat Re

KUALA LUMPUR, Sept 25 (Bernama) -- Global credit rating agency, AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of National Reinsurance Corporation of the Philippines (Nat Re).

AM Best has also assigned the Philippines National Scale Rating (NSR) of aa+.PH (Superior) to Nat Re, and the outlook of these credit ratings (ratings) is stable.

In a statement, AM Best said the ratings reflected Nat Re’s balance sheet strength, which was assessed as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Nat Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, which remained at the strongest level in 2022.

The rating agency viewed the company’s investment portfolio as having moderate risk. Despite some exposure to corporate bonds and equity investments, the majority of Nat Re’s portfolio is composed of fixed income securities issued by the Philippines’ government.

Nat Re’s operating performance was assessed as adequate, with a five-year average return-on-equity ratio of 2.3 per cent (2018-2022), while net profit declined in 2022 compared to the prior year.

While the company reported lower underwriting losses in 2022, compared to 2021, the improvement was outweighed by lower investment income, which was partially impacted by investment impairment and fair value losses on equity investments.

AM Best viewed Nat Re’s business profile as neutral. As the only domestic reinsurer in the Philippines, the company is well-positioned for business opportunities emanating from local government initiatives, including its engagement in the design and launch of underwriting facilities in the Philippines market.

The company’s risk management framework and corporate governance capabilities are viewed to have strengthened over recent years, considering its ERM approach to be appropriate given the current size and complexity of its operations.

-- BERNAMA