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According to AM Best, Malayan Insurance continues to record excellent technical results in its auto business, which helps to balance the poor performance in its fire business.

Over the last several years, the insurer’s overall underwriting performance has been hindered by volatility and unfavorable loss experience in its fire business, which has been fueled by catastrophic and high loss occurrences.

Malayan Insurance, the Philippines’ largest non-life insurer, posted a five-year average combined ratio and return-on-equity ratio of 99.9% and 4.6 percent, respectively (2016-2020), satisfactory performance according to AM Best.

Malayan’s total profits are still mostly derived from investment income, which includes interest and dividend income.

Meanwhile, AM Best has confirmed Malayan Insurance’s Financial Strength Rating (FSR) of B++ (Good) and Long-Term ICR of “bbb+” (Good) and changed the Long-Term Issuer Credit Rating (Long-Term ICR) outlook to stable from negative. The FSR has a steady outlook.

These credit ratings, according to AM Best, indicate Malayan’s extremely solid balance sheet, as well as its acceptable operational performance, neutral company profile, and suitable enterprise risk management. In addition, the ratings take into account the company’s ultimate ownership by Pan Malayan Management and Investment Corporation, which has a neutral effect.

Outlook

Following an increase in the company’s risk-adjusted capitalization, as assessed by Best’s Capital Adequacy Ratio, the Long-Term ICR outlook was revised to stable from negative (BCAR). As a consequence of recent and continuing decreases in its equity investment exposure, Malayan’s risk-adjusted capitalization is anticipated to stay at the highest level and show less volatility in the future.

The company’s significant dependence on reinsurance to allow the underwriting of big property risks, as well as its exposure to counterparties that are not rated on an international financial strength rating scale, are somewhat balancing balance sheet issues. The company’s balance sheet strength is also vulnerable to catastrophic natural disasters, but this risk is somewhat reduced by reinsurance.

Profile of a company

The firm’s neutral business profile reflects its position as the Philippines’ biggest non-life insurance provider by gross premium written in 2020. In terms of branding and distribution, Malayan benefits from its connection with the Yuchengco Group of Companies, a major conglomerate in the Philippines. Malayan has shown a strong commitment to digital transformation, which is a key component of the company’s long-term retail business growth plan.

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