AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Lonpac Insurance Bhd (Lonpac) (Malaysia). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Lonpac’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.

Lonpac’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which was at the strongest level as of year-end 2024, as measured by Best’s Capital Adequacy Ratio (BCAR), and is expected to remain at this level over the medium term. In addition, the company has a generally conservative investment portfolio comprising cash, bonds and debt-focused unit trust funds. A partially offsetting balance sheet strength factor is the company’s moderate reliance on reinsurance to support its underwriting capacity and manage its catastrophe exposures. However, this risk is mitigated partially by the high credit quality of the reinsurance panel.

Lonpac’s operating performance is assessed as strong, with a return-on-equity ratio of 25.8% in 2024 (2023: 23.2%). Underwriting margins have benefited from a low net loss experience in property and bond classes of business, as well as favourable reinsurance commission income, which remain the key drivers of technical profitability over recent periods. Investment returns continue to be a stable contributor to the company’s overall earnings. The company’s year-to-date 2025 operating performance remains favourable, supported by stable underwriting profit and investment return. Whilst AM Best expects Lonpac to maintain its strong operating performance over the medium term, supported by its disciplined underwriting approach, the ongoing phased liberalisation of motor and fire insurance pricing in Malaysia may constrain its underwriting margins.

AM Best assesses Lonpac’s business profile as neutral. The company is a mid-sized non-life insurer in Malaysia, with a market share of approximately 8%, based on 2024 gross direct premiums. The company’s underwriting portfolio is diversified moderately by line of business, albeit with a majority of business originating from Malaysia. Lonpac benefits from a long-standing relationship with Public Bank Berhad, which provides the company with preferential access to profitable property business through the banking channel.

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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