Fitch has upgraded Indonesia-based PT Meritz Korindo’s credit rating, even after its combined ratio (COR) surged by 68 percentage points to an unprofitable level.
In a commentary released on Wednesday, the credit ratings agency raised PT Meritz Korindo Insurance’s National Insurer Financial Strength (IFS) Rating to ‘AAA(idn)’ from ‘A+(idn)’. The outlook is stable.
The upgrade reflects the company’s strategic importance to its South Korea-based parent, Meritz Fire & Marine Insurance Co., Ltd. (Meritz F&M). “We now assess the strategic importance of Meritz Korindo to its parent as ‘Very Important’, from ‘Important’ previously, based on the continued track record of ownership and linkages with the group.”
The parent company owns approximately 51% of PT Meritz Korindo, highlighting both its capacity and willingness to provide support. Fitch noted that Meritz F&M has maintained a strong capital adequacy ratio—consistently above 2,205%—and a return on equity (ROE) of more than 30% over the past three years.
Despite this, Fitch reported that Meritz Korindo’s COR reached 105% in 2024, a sharp increase from 37% the previous year. The rise was attributed to higher marine claims from the Korindo Group. On average, from 2022 to 2024, the company recorded a COR of 61%.
The deterioration in COR led to a 36% decline in net profit, which fell to IDR14bn (US$859,426) in 2024.
Fitch also highlighted a sharp drop in the exposure of Meritz Korindo’s capital base to reinsurance recoverables, which fell to 54% at end-2024 from 125% a year earlier, following reinsurance recoveries in the property and marine cargo lines.
Meritz Korindo’s risk-based capital (RBC) ratio rose to 752% by end-2024, up from 512% the previous year, as large claims were settled and claim reserves declined. This level is well above the regulatory minimum of 120%. The company’s credit risk also fell, aided by reinsurance recoveries. Its equity stood at IDR 309bn at end-2024, already exceeding the new 2026 regulatory requirement of IDR 250bn.
The ratings agency assessed Meritz Korindo’s company profile as ‘Less Favourable’, citing its ‘Less Favourable’ business profile and ‘Neutral’ corporate governance. The company held just 0.2% of Indonesia’s non-life insurance market in terms of gross written premiums (GWP) in 2023.
Its business portfolio is heavily weighted towards property, which made up 69% of its 2024 GWP, followed by marine cargo at 12%. More than 70% of its business originates from Korean accounts, including those of its parent and the Korindo Group. The remainder comes from local clients and inward reinsurance channels.
