The financial strength rating of A (Excellent) and long-term issuer credit rating of “a” of Energas Insurance Limited, has been affirmed by A.M. Best.
The outlook of these ratings for Energas, the sole captive of Malaysia’s natural oil and gas company, Petroliam Nasional Berhad, is stable.
The ratings are reflective of the captive’s balance sheet strength, which A.M. Best categorises as very strong, in addition to its strong operating performance, neutral business profile and appropriate enterprise risk management.
Also incorporated in the ratings are Energas’ solid risk-adjusted capitalisation, comprehensive reinsurance programme and strong operating performance, as evidenced by a five-year average combined ratio of approximately 53 percent.
According to the ratings agency: “Partially offsetting these positive rating factors is a reduction in prospective earnings derived from smaller premium volumes as Petronas scales back on its upstream activities.”
“Nonetheless, A.M. Best expects Energas’ active cycle management and efficient cost structure to buffer some of the negative pressure on its combined ratio and to aid in keeping overall earnings positive.”
Though positive ratings movement is unlikely in the near term, negative ratings movement may arise should Energas’ operating performance or risk-adjusted capitalisation deteriorate in the event of repatriation of capital.
