AM Best affirms ratings of Malaysia’s national oil company’s captive

Ratings agency AM Best has affirmed the Financial Strength Rating of A (Excellent) of Energas Insurance, the sole captive insurer of Petroliam Nasional Berhad, Malaysia’s national oil and gas company. The outlook of the ratings is stable.

AM Best said the ratings reflect Energas’ balance sheet strength, which it categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

The ratings also incorporate Energas’ solid risk-adjusted capitalization, comprehensive reinsurance programme and historically strong operating performance, evidenced by a five-year average combined ratio of approximately 53 percent.

Partially offsetting these positive rating factors is a reduction in prospective earnings derived from smaller premium volumes as Petronas scales back on its upstream activates. Nonetheless, AM Best expects Energas’ active cycle management and efficient cost structure to buffer some of the negative pressure on its combined ratio and to aid in keeping overall earnings positive.

Positive rating actions are unlikely in the near term. Negative rating actions may arise if there is material deterioration of Energas’ operating performance or risk-adjusted capitalization in the event of repatriation of capital.