AM Best affirms Energas Financial strength rating at ‘A’

KUALA LUMPUR: US- based rating agency AM Best has affirmed the financial strength rat ing of Petronas’ sole captive insurance company, Energas Insurance ( L) Ltd, at A ( Excellent) and the issuer credit rating at “A”.

The rating agency has also put the outlook on both ratings as stable.

AM Best in a statement yesterday said the rat ing a f f irmat ion ref lects the company ’ s st rong ri skadju sted capita l i sat ion, c ont i nu i n g f avou r abl e operating performance and comprehensive reinsurance programme.

“The ra t i n g s also acknowledge its strategic position as the sole captive insurance company for Petronas, the national oi l and gas company of Malaysia, which is wholly- owned by the Government of Malaysia.

“Energas’ role is an integral component in the overall risk management programme of the group,” it said.

It said Energas’ capital and surplus have been growing steadi ly in the past f ive years due to its favourable underwriting results while the company’s financial strength is further underpinned by its retention of earnings, risk selection and reinsurance programme.

I n add it ion, Energas has maintained a prudent investment portfolio of high liquidity, it said.

AM Best said Energas maintains a comprehensive reinsurance programme with a strong panel of reinsurers, which is expected to continue to protect its capitalisation in the event of large losses.

However, it said, partially offsetting these positive rating factors are Energas’ potential volat i l ity of underwriting performance and capitalisation due to its captive business nature and higher risk retention since 2013.

Nevertheless, it said, Energas is well positioned at its current rating level.

“Negative rating actions could occur if there is material deterioration in operating performance, resulting in a material decline in its riskadjusted capitalisation level.

“Alternat ively, negat ive rating pressure might arise if there is a significant downward movement of Petronas’s credit profile,” it added. — Bernama