ENERGAS’s underwriting performance has shown improvement in the first nine months of 2024, AM Best reports.
The ratings agency has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) for Energas Insurance (L) Limited (Malaysia). The ratings also factor in a neutral impact from the parent company, PETRONAS, the national oil and gas company of Malaysia.
However, AM Best maintained a negative outlook on the ratings due to pressure on operating performance.
The underwriting performance of ENERGAS has experienced deterioration due to heightened claims frequency. However, AM Best notes the first nine months of 2024 saw an improvement, driven by favourable loss experience and premium rate increases.
“Despite ongoing remedial measures, the efficacy of these actions remains subject to execution risk,” the ratings agency added.
AM Best regards ENERGAS’s investment portfolio as conservative, with the majority of its investments in cash and deposits and the rest in quality government and corporate bonds.
The balance sheet strength of ENERGAS is supported by its risk-adjusted capitalisation at the strongest level, as per Best’s Capital Adequacy Ratio. Underwriting risks’ capital requirements are considered low due to low net underwriting leverage. Potential high severity loss accumulations may affect the balance sheet, but this risk is mitigated by reinsurance.
As a single-parent captive to Petroliam Nasional Berhad (PETRONAS), ENERGAS has access to the group’s insurance risks. The company’s underwriting portfolio focuses on upstream and downstream energy risks in Malaysia, showing concentration by line of business and geography. AM Best rates ENERGAS’s business profile as neutral.
