SINGAPORE--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to PT Asuransi Tokio Marine Indonesia (TMI) (Indonesia). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect TMI’s strong risk-adjusted capitalization and good underwriting performance. The ratings also recognize the implicit and explicit support provided by the company’s ultimate parent, Tokio Marine Holdings, Inc., of which the main operating entity is Tokio Marine & Nichido Fire Insurance Co., Ltd.
TMI is a joint venture between Tokio Marine Asia Pte. Ltd. and PT Asuransi Jasa Indonesia (Persero), which have 60% and 40% shareholdings, respectively. While a large number of TMI’s clients are Japanese companies operating in Indonesia, TMI has a small but growing segment of Indonesian clients.
TMI’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supported by the company’s low net underwriting leverage. The company’s investment portfolio is conservative, with most investments placed in cash and government bonds.
In terms of performance, TMI has produced favorable underwriting results, especially in its Japanese-related risks. Investment income, mostly from cash deposits and government bonds, also has supported the company’s results.
An offsetting rating factor is an upward trend in the company’s expense ratio, due to keen competition and inflationary pressures. Additionally, while Japanese companies operating in Indonesia provide TMI with a steady stream of business, the company could face challenges in expanding beyond its traditional area of operations due to its limited presence in Indonesia’s non-life market. There also are concerns over reinsurance asset quality in the event of a catastrophe. This is because Indonesia’s regulator requires a certain amount of domestic reinsurance that may not have good credit quality by international standards.
The company is well-positioned at its current rating level. Negative rating actions may arise from material deterioration in operating performance or risk-adjusted capitalization.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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