SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of C (Weak) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “ccc+” (Weak) of PT Asuransi Jasa Indonesia (Asuransi Jasindo) (Indonesia). The outlook of the FSR is stable, while the outlook of the Long-Term ICR is negative. Concurrently, these Credit Ratings (ratings) have been withdrawn as the company has requested to no longer participate in AM Best’s interactive rating process.
The ratings reflect Asuransi Jasindo’s balance sheet strength, which AM Best assesses as weak, as well as its marginal operating performance, neutral business profile and marginal enterprise risk management (ERM).
Asuransi Jasindo’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), was at the very weak level as of year-end 2020 and is expected to remain at this level for year-end 2021. In addition, Asuransi Jasindo’s local regulatory solvency ratio has fallen significantly below the minimum regulatory requirement in 2020 and 2021. AM Best expects the company’s capital adequacy to remain under pressure over the near term, with subsequent improvement subject to the timely and successful execution of capital management actions being planned and implemented by the company.
The operating performance assessment of marginal reflects the company’s under-performance and earnings volatility in recent periods. Underwriting performance has demonstrated significant deterioration over recent years, driven by unfavourable claims experience from the company’s credit insurance business, which has been impacted materially by the COVID-19 environment.
The company’s ERM is considered to be marginal. AM Best views the profile of some key risks as exceeding Asuransi Jasindo’s risk management capabilities. Recent technical losses raise concern over inadequacies in underwriting controls and governance. Weaknesses in capital management are highlighted by the company’s inability to meet minimum regulatory requirements at present.
The negative Long-Term ICR outlook reflects AM Best’s expectation of continued pressure on the company’s balance sheet strength, operating performance and ERM fundamentals over the intermediate term. While Asuransi Jasindo’s management team continues to implement a turnaround strategy aimed at restoring capital adequacy and improving prospective operating performance, significant execution and downside risks remain at present.
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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