A.M. Best Affirms Ratings of Malayan Insurance Co., Inc.

A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb+” of Malayan Insurance Co., Inc. (MICO) (Philippines). The outlook for both ratings is stable.

The ratings reflect MICO’s solid risk-adjusted capitalization, consistently favorable investment performance and leading position in the Philippine non-life insurance market. The ratings also recognized the continued parental support from Yuchengco Group in terms of distribution.

MICO’s risk-adjusted capitalization level, as measured by Best's Capital Adequacy Ratio (BCAR), is solid and supportive of its current ratings, which is mainly contributed by the company’s strong dividend and interest income arising from equities, debt securities and short-term investments, offsetting the underwriting deficit and delivering a net profit in each of the past five years. With a long operating history in the Philippine’s non-life insurance industry, MICO has been its largest insurer in terms of gross premium written in the past four decades.

Partially offsetting these positive rating factors is MICO’s continued unfavorable underwriting performance, stemming from the loss experience in frequent natural catastrophe events in recent years. The competitive conditions in the Philippines’ non-life market will challenge MICO’s ability to maintain market share in the coming years.

Future upward rating action is unlikely in the near term. Conversely, downward rating actions could occur if the company’s risk-adjusted capitalization declines materially as a result of the poor underwriting results or a decline in its invested asset value.

The methodology used in determining these interactive ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

• Catastrophe Analysis in A.M. Best Ratings
• Evaluating Country Risk
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding Universal BCAR

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

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