HONG KONG--(BUSINESS WIRE)--A.M. Best Co. has affirmed the financial strength rating of B++ (Good) and issuer credit rating of “bbb” of PT Asuransi Jasa Indonesia (Persero) (Jasindo) (Indonesia). The outlook for both ratings is stable.
The ratings reflect Jasindo's long operating history and strong market profile in Indonesia, improved underwriting performance over the last two years, sound liquidity and favorable investment income. The ratings also acknowledge the company's effort to enhance the measurement of risks through the development of enterprise risk management.
Although the expense ratio remains high relative to its Asian peers, it has trended downward over the past five years due to expenditure control. A more prudent pricing strategy and risk selection have lowered the net loss ratio since 2008, contributing to an improvement in the combined ratio for the second consecutive year.
Jasindo continues to record positive investment income, which consistently balances its bottom line by cushioning the underwriting volatility. Its sound level of liquidity also enables it to settle claims in a short timeframe.
Offsetting factors include the competitive landscape in Jasindo’s core operating market, its reserving practice and exposure to potential catastrophe perils.
Due to the change in regulation, the emergence of stronger players in Jasindo's key marketplace will further soften the operating environment, which will reduce its underwriting margin.
Jasindo’s incurred but not reported claims reserve (IBNR) is assessed by applying percentages to the outstanding claims reserves. Given the prevailing claims reserve practice, A.M. Best remains cautious regarding Jasindo's loss development pattern in its insurance portfolio and the potential impact on the adequacy of its claim reserves in the future.
The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Understanding Universal BCAR”; “Natural Catastrophe Stress Test Methodology”; “Assessing Country Risk”; and “Risk Management and the Rating Process for Insurance Companies.” Methodologies can be found at www.ambest.com/ratings/methodology.
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