Malaysia's ENERGAS Rated Excellent, Says AM Best

KUALA LUMPUR, March 17 (Bernama) -- Global credit rating agency, AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent) for Malaysia’s Energas Insurance (L) Limited (ENERGAS), with a negative outlook.

In a statement, AM Best said the credit ratings (ratings) reflected ENERGAS’ very strong balance sheet, solid operating performance, neutral business profile and appropriate enterprise risk management.

The ratings also factor in a neutral impact from its parent company, Petroliam Nasional Berhad (PETRONAS), Malaysia’s national oil and gas company.

The negative outlook is attributed to pressure on ENERGAS’ operating performance, as its underwriting results have deteriorated due to higher claims frequency.

However, the company’s performance improved in the first nine months of 2024, supported by better loss experience and premium rate adjustments. AM Best noted that the effectiveness of ongoing remedial measures remains subject to execution risk.

ENERGAS’ balance sheet strength is underpinned by its strongest-level risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio. Its investment portfolio remains conservative, with the majority allocated to cash, deposits, and good-quality government and corporate bonds.

While underwriting risks remain low due to low net underwriting leverage, potential high-severity losses from multiple policies could lead to balance sheet volatility, although this risk is mitigated by reinsurance.

AM Best considers ENERGAS’ business profile neutral, given its role as a single-parent captive to PETRONAS. The company benefits from access to the group’s insurance risks but remains concentrated in upstream and downstream energy sectors in Malaysia.

-- BERNAMA