AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of B++ (Good), Long-Term Issuer Credit Rating of “bbb” (Good) and Philippines National Scale Rating (NSR) of aa+.PH (Superior) of Malayan Insurance Co., Inc. (Malayan) (Philippines).

The Credit Rating (ratings) reflect Malayan’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. In addition, the ratings factor in a neutral impact from the company’s ultimate ownership by Pan Malayan Management and Investment Corp.

The revised outlooks to negative from stable reflect continued pressure on Malayan’s operating performance fundamentals, mainly due to underwriting performance volatility driven by catastrophe and large loss events in recent periods. The company recorded underwriting losses in three of the past five years, with a five-year average (2020-2024) combined ratio of 105.6%. In 2024, while total operating earnings remained profitable, the company reported an underwriting loss, driven by elevated catastrophe losses that negatively impacted the company’s core commercial lines. Investment income continues to be the principal contributor to Malayan’s overall earnings, supporting the company’s track record of positive earnings. For the first half of 2025, the company recorded an underwriting loss largely driven by adverse loss reserve development on prior periods.

Prospectively, AM Best expects underwriting profitability to improve, driven by the ongoing portfolio remediation measures undertaken by the company, however, this is subject to execution risk.

Malayan’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which is expected to remain at the strongest level over the medium term. Nonetheless, the company’s risk-adjusted capitalisation is viewed to be sensitive to shock events, particularly arising from the occurrence of multiple severe catastrophe events in short succession. Offsetting factors include the company’s high reliance on reinsurance to support the underwriting of large commercial risks and its exposure to counterparties that are non-rated on an international FSR scale. AM Best views Malayan’s investment portfolio to have moderate risk, comprising mainly fixed-income securities and a moderate exposure to equity investments.

The neutral business profile assessment reflects Malayan’s position as one of the largest non-life insurance companies in the Philippines based on gross premium written in 2024. The company benefits from its affiliation with the Yuchengco Group of Companies, a large conglomerate in the Philippines, in terms of branding and distribution. Malayan continues to demonstrate a strong commitment toward digital transformation, which is an important pillar of the company’s long-term strategy for retail business development.

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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