AM Best has affirmed the Financial Strength Rating of B++ (Good), the Long-Term Issuer Credit Rating of “bbb” (Good) and the Philippines National Scale Rating of aa+.PH (Superior) of National Reinsurance Corporation of the Philippines (Nat Re) (Philippines). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Nat Re’s balance sheet strength, which AM B.est assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Nat Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which was at the strongest level at year-end 2024, and good financial flexibility. AM Best views the company’s investment portfolio as having moderate risk with the majority of assets allocated to fixed-income securities issued by the Philippines government. Additionally, Nat Re’s balance sheet remains sensitive to outsized natural catastrophe events, although this risk is mitigated partially by the company’s retrocession programme.

AM Best assesses Nat Re’s operating performance as adequate, with a five-year average return-on-equity ratio of 4.8% (2020-2024). Underwriting performance improved in recent years, driven by an improved expense ratio resulting from lower net acquisition costs and management expenses relative to earned premiums. However, in 2024, the loss ratio was impacted negatively by an increase in experience refund to cedents due to better than anticipated loss experience, and unfavourable prior year claims development stemming from the company’s life portfolio. Investment income, arising mainly from interest and dividend income, continues to contribute positively to operating earnings. Prospective underwriting performance is expected to be supported by portfolio remediation measures in its non-life reinsurance segment, as well as business growth in its profitable life reinsurance segment and other specialty lines.

AM Best assesses Nat Re’s business profile as neutral. The company is the sole domestic reinsurer in the Philippines, benefiting from strong relationships with local cedants and access to business through mandatory local cessions. Nat Re is well-positioned for business opportunities emanating from local government initiatives and new service offerings, which include its engagement in the design and launch of underwriting facilities in the Philippine market, enabling it to write greater business volumes in excess of the level stipulated by the mandatory cessions. The company writes non-life and life reinsurance and its underwriting portfolio is viewed to be diversified moderately by geography.

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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