RAM reaffirms ratings of MNRB and Malaysian RE

KUALA LUMPUR (Feb 8): RAM Rating Services Bhd has reaffirmed MNRB Holdings Bhd’s senior debt issue rating at AA3/Stable and Malaysian Reinsurance Bhd’s (Malaysian Re) financial strength rating at AA2/Stable/P1.

The rating agency said in a statement that the rating action reflected MNRB’s dominant position in the domestic general reinsurance industry where its primary subsidiary, Malaysian Re, had retained a significant share (66%) of the industry’s gross reinsurance premiums in 2019.

“Its well-established franchise in the domestic market is supported by regulatory voluntary cession arrangements and Malaysian Re’s long-standing relationships with local cedants.

“The ratings also consider the group’s subsidiaries’ healthy capitalisation and strong reserves coverage, although its volatile underwriting performance counterbalances these strengths,” it said.

RAM Rating said MNRB’s credit profile hinges on Malaysian Re’s given that the latter is the largest contributor to the group’s earnings.

It said Malaysian Re drove much of the group’s earnings improvements in the financial year to March 2020 (FY20) and the first half of FY21 thanks to a rebound in growth in the reinsurer’s overseas portfolio.

While it does not expect a substantial increase in claims arising from the pandemic due to limitations on claims for infectious and contagious diseases, Malaysian Re had nonetheless made a conservative assessment and set aside RM18.9 million for potential COVID-19 related claims in first the half of fiscal 2021, RAM Rating added.

Source: TheEdgeMarkets