Mandal Daatgal JSC Credit Ratings Affirmed -- AM Best

KUALA LUMPUR, Jan 13 -- Global credit rating agency AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of ‘bb+’ (Fair) of Mandal Daatgal JSC (Mandal) Mongolia.

The outlook of these Credit Ratings (ratings) is stable, according to a statement.

The ratings reflect Mandal’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile, and appropriate enterprise risk management.

Mandal’s balance sheet strength is supported by its risk-adjusted capitalisation, which is at the strongest level as of year-end 2020, as measured by Best’s Capital Adequacy Ratio (BCAR), although the absolute size of its capital base remains small at MNT 22.7 billion (USD 8.6 million). (US$1 = RM4.172)

Besides the company’s investment portfolio, which is exposed primarily to lower-rated and non-rated fixed income securities, other offsetting factors of the company’s balance sheet strength assessment include the quality and diversification of its reinsurance treaty panel, which AM Best views as less favourable compared with most other large regional and global insurers.

Mandal’s operating performance has been strong and consistent, with key operating metrics generally outperforming those of its regional peers.

This is attributed to its history of profitable underwriting and investment, as demonstrated by a five-year average combined ratio of approximately 95 per cent and an average operating ratio of 72 per cent.

During fiscal year 2020, the company’s combined ratio exceeded 100 per cent, mainly due to a higher-than-expected number of large losses in the motor physical damage line and the commercial property line.

In response, Mandal has implemented various initiatives to stabilise and improve its prospective underwriting performance, which AM Best expects should help Mandal’s underwriting and operating results to revert to a strong level.

The stable outlooks reflect AM Best’s expectation that Mandal’s operating performance will remain profitable, although the company’s underwriting results are likely to remain volatile until the company can achieve much greater scale.

More details at www.ambest.com.

-- BERNAMA