AM Best Assigns Stable Outlook To Philippines' MAAGAP
KUALA LUMPUR, July 22 (Bernama) -- Global credit rating agency, AM Best has assigned a financial strength rating of B+ (Good), a long-term issuer credit rating of “bbb-” (Good) and a Philippines National Scale Rating of aa.PH (Superior) to MAAGAP Insurance Inc (MAAGAP).
AM Best in a statement said the outlook assigned to these credit ratings (ratings) carries a stable outlook, reflecting MAAGAP's strong balance sheet strength assessment, adequate operating performance, limited business profile and appropriate enterprise risk management.
MAAGAP’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, which is expected to remain at the strongest level over the medium term.
The company's robust capital adequacy benefits in part from healthy earnings retention over recent years. In addition, it has a low-to-moderate risk investment portfolio, with the majority of investments allocated to Philippine government bonds and well-rated domestic corporate bonds.
A partially offsetting factor is MAAGAP's elevated reliance on reinsurance to support the underwriting of catastrophe-exposed business. However, this risk is partially mitigated because the majority of its reinsurance recoverables are from counterparties with sound credit quality.
AM Best assesses MAAGAP's operating performance as adequate, with a five-year average return on equity of 8.8 per cent for fiscal years 2021 to 2025. Its underwriting performance showed some volatility over the period, partly due to losses arising from natural catastrophes and large loss events.
However, ongoing remedial measures supported an improvement in underwriting results in fiscal year 2025, although the elevated expense ratio recorded in recent periods remains an offsetting factor.
Prospectively, this is expected to improve as the company grows its book of business and benefits from greater economies of scale. Additionally, investment returns, derived mainly from interest income, are viewed to be stable and supportive of overall earnings.
-- BERNAMA