Etiqa Insurance Berhad ratings affirmed: Fitch

Fitch Ratings has affirmed Malaysia-based Etiqa Insurance Berhad’s (EIB) Insurer Financial Strength rating at ‘A’ with a stable outlook.

The rating reflects EIB’s solid capital strength, favorable underwriting margin, and sound liquidity. The rating also considers the company’s extensive distribution coverage and its strategic status as one of the core operating subsidiaries within Maybank Ageas Holdings Berhad (MAHB), a major insurance group in Malaysia.

EIB’s capitalisation remained strong despite a dividend payout of RM450.2m to MAHB in 2013. Slower premium growth along with the issuance of RM500m of subordinated bonds, which can be recognised as part of Tier 2 capital improved the company’s statutory risk-based capital (RBC) ratio from 225 percent at end-2012 to 282% at end-2013, well in excess of the regulatory minimum of 130 percent. In view of the company’s ongoing surplus growth, Fitch believes that EIB is capable of keeping adequate capital buffer to support its premium expansion.

EIB further strengthened the underwriting profitability of its general insurance portfolio in 2013. The company’s overall loss ratio decreased to 55.5 percent in 2013 from 57.6 percent in 2012 partly due to a reduction in its exposure to motor insurance. Gross written premiums from motor insurance declined by 6.1 percent in 2013, although it still amounted to about 47.5 percent of its total net written premiums.