Tugu Insurance Company Limited Credit Ratings affirmed - AM Best

KUALA LUMPUR, April 15 (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 Tugu Insurance Company Limited (TIC) Hong Kong. The outlook of these Credit Ratings (rating) is stable.

According to a statement, the ratings reflect TIC’s balance sheet strength, which United States-headquartered AM Best assesses as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).

TIC’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), remained at the strongest level and is supportive of the strong balance sheet strength assessment.

Over the past five years, the company’s capital and surplus experienced some volatility, mainly due to revaluation gains or losses arising from its concentrated investment properties, while the underwriting results remained marginal.

TIC’s overall profitability over the past few years was affected by significant reserve movement, and some large losses from its commercial lines of business, for example, property damage, goods in transit, and employees’ compensation.

While TIC reported robust premium growth rate in 2021, it continued to record an elevated level of expense ratio due to the small premium base. The company’s operating profitability is supported by its investment return, which mainly consists of a stable stream of rental income, dividend, and interest income.

The annual revaluation of TIC’s investment properties may pose some volatility to its net profits or losses from year to year, with AM Best expecting TIC’s overall profitability to remain thin over the next few years.

TIC remains a small player in Hong Kong’s highly competitive and fragmented non-life market. While oil and gas business from its parent company, PT Pertamina (Persero), continued to form a large proportion of its underwriting book, TIC expands more actively in other overseas business, such as goods in transit, and domestic Hong Kong business over the short to intermediate term.

TIC’s risk management framework continues to evolve. The company has refined its risk appetite statements and risk policies, performed multiple stress and scenario tests, and projected its capital position under the upcoming regulatory solvency requirements with the assistance of external consultants.

AM Best has regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

For more information, visit www.ambest.com.

-- BERNAMA