SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) to PT Asuransi Astra Buana (Asuransi Astra) (Indonesia). The outlook of these Credit Ratings (ratings) is stable. Concurrently, AM Best has assigned the Indonesia National Scale Rating (NSR) of aaa.ID (Exceptional) to Asuransi Astra with a stable outlook.
The ratings reflect Asuransi Astra’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also factor in a neutral impact from Asuransi Astra’s ultimate parent, Jardine Matheson Holdings Limited (Bermuda).
Asuransi Astra’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which was at the strongest level at 31 December 2022, as measured by Best’s Capital Adequacy Ratio (BCAR), and is expected to be maintained at this level prospectively. The company’s capital adequacy is supported by its internal capital generation and low net underwriting leverage. AM Best views Asuransi Astra’s investment portfolio to have moderate risk, comprising mainly bonds held directly and through mutual funds with more than half of those being domestically rated bond funds. An offsetting balance sheet strength factor is the company's elevated counterparty credit risk due to its exposure to domestic reinsurance companies not rated on an international FSR scale.
AM Best also views Asuransi Astra’s operating performance as strong, demonstrated by its five-year average combined ratio of 88.1% and return-on-equity ratio of 17.6% (2019-2023). Profitable business from its parent group, PT Astra International Tbk (Astra group), is one of the key contributors to Asuransi Astra’s strong operating performance. Net income for 2023 was IDR 1.4 trillion (USD 109 million), compared with IDR 1.2 trillion in 2022. The company’s underwriting performance remained robust in 2022 and 2023, as the negative impact of claims normalisation on its loss ratio was offset by an improved expense ratio. Investment returns remain a stable contributor to the company’s overall earnings.
AM Best assesses Asuransi Astra’s business profile as neutral. Asuransi Astra is a large insurance organisation in Indonesia, ranking third in the country’s general insurance market based on 2022 market share. The company’s portfolio is diversified by line of business with key lines being motor, personal accident and health, and fire insurance; however, there is a geographic concentration in Indonesia. The company has moderate distribution channel concentration to a financial leasing company, mainly in respect of motor insurance. Asuransi Astra benefits from being a subsidiary of the Astra group, having preferential access to business from it, especially in the motor line of business.
Additionally, AM Best views the company’s ERM framework as appropriate given the current size and complexity of the company’s operations.
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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