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RPT-FITCH: INSURANCE SINAR MAS at IFS 'AA + (idn)' / POSITIVE OUTLOOK
March 7, 2014 / 9:58 AM / 4 years ago

RPT-FITCH: INSURANCE SINAR MAS at IFS 'AA + (idn)' / POSITIVE OUTLOOK

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March 7 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has affirmed the ratings National Insurer Financial Strength (IFS) PT Asuransi Sinar Mas (ASM) in ‘AA + (idn)'. The prospect has been revised to Positive from Stable. National IFS rating ‘AA’ indicates a very strong capacity for meet obligations to policyholders relative to all liabilities other or other issuers in Indonesia, regardless of industry and type of liability. The risk of cessation or interruption of payments just different less than the bond or the issuer with the highest ranking in the country The.

DRIVER RATING FACTORS

Positive Outlook revision reflects Fitch’s view that operating performance ASM and capitalization will continue to improve, while the balance will remain fundamentally strong.

The rating continues to take into account the ability of ASM to maintain strong market franchise. ASM is the largest general insurance company Indonesia based on gross premiums, with a market share of approximately 10% at the end , 2012. The company’s strong market position is rooted in its ability to deploy insurance products through multiple channels of distribution as well as recognition strong brand which comes from a long track record in the industry.

The company has been consistently profitable and showed a trend underwriting margin due to the increase in premium income stable and prudent underwriting policy. ASM retain a combined rate ratio (aggregate commission expense ratio and the ratio of losses incurred) under 90% in consistent over the last five years and reached 79.3% at the end Oktober 2013 (2012: 80.5% 2011: 87.6%).

ASM also maintain sufficient capital buffer, the capitalization ratio risk-based (RBC) ratio remains above 200% over the past five years, far above the minimum regulatory requirement of 120%. Its RBC ratio increased to 338.91% at the end of the third quarter of 2013 rather than 300% at the end of 2012.

ASM source of business is almost entirely derived from the Indonesian market. Indonesia regarded as a disaster-prone market as exposed by natural disasters such as earthquakes, floods and tsunamis. It is therefore important for the ASM to maintaining a prudent reinsurance program to support activities company’s operations and business growth.

SENSITIVITY RATINGS

The main drivers for the rating upgrade includes an increase in performance ASM operations are ongoing, with the combined ratio remained below 90% ongoing basis, and capitalization relative to peers in rating, with RBC ratio consistently above 350%.

The main trigger for a downgrade include a significant reduction in capitalization of the company in connection with a business profile, or from a decrease in operational performance with a combined ratio above 100% and net premium written-to-equity rises above 2x in the long term (end of October 2013: 0.99x).

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