AM Best has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of Energas. The outlook for both ratings is stable.
The rating affirmations reflect the company’s strong risk-adjusted capitalisation, continuing its favourable operating performance and comprehensive reinsurance program.
The ratings also acknowledge its strategic position as the sole captive insurance company for Petroliam Nasional Berhad, the national oil and gas company of Malaysia, which is wholly owned by the Malaysian government. Energas’s role is an integral component in the overall risk management program of the group.
Energas’s capital and surplus has been growing steadily in the past five years due to its favourable underwriting results. The company’s financial strength is further underpinned by its retention of earnings, risk selection and reinsurance program. In addition, Energas has maintained an investment portfolio of high liquidity.
Energas maintains a comprehensive reinsurance program with a strong panel of reinsurers, which is expected to continue to protect its capitalisation in the event of large losses.
Partially offsetting these positive rating factors are Energas’s potential volatility of underwriting performance and capitalisation due to its captive business nature and higher risk retention since 2013.
Negative rating actions could occur if there is material deterioration in operating performance, resulting in a material decline in its risk-adjusted capitalisation level. Alternatively, negative rating pressure might arise if there is a significant downward movement of Petronas’s credit profile.
