AM Best Affirms Credit Ratings of PT Asuransi Tokio Marine Indonesia

AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of PT Asuransi Tokio Marine Indonesia (TMI) (Indonesia). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect TMI’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management. In addition, the ratings factor in rating enhancement from Tokio Marine & Nichido Fire Insurance Co., Ltd. (TMNF), which is the main insurance operating entity of Tokio Marine Holdings, Inc. (TMH).

TMI’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which is expected to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). TMI has demonstrated strong internal capital generation, with average annual shareholders' equity growth of 13.2% over the past five years (2018-2022). The company’s regulatory solvency ratio improved from 340% at year-end 2021 to 350% at year-end 2022, substantially above the minimum regulatory requirement of 100%. In addition, TMI has a conservative investment portfolio composed of mainly government bonds, cash and deposits. Partially offsetting balance sheet strength factors include the company’s moderate dependence on reinsurance and elevated counterparty credit risk given its exposure to domestic (re)insurance counterparties that are not rated on an international financial strength rating scale.

AM Best assesses the company’s operating performance as strong, supported by consistently favourable underwriting results and a five-year average return-on-equity ratio of 18% (2018-2022). The company reported a combined ratio of 84% in 2022, which was stable relative to 2021. TMI’s loss ratio increased marginally in 2022; higher loss ratios in its marine cargo and engineering lines were mitigated by more favourable loss experience in fire insurance and other lines. The company’s expense ratio declined in 2022, driven by a larger net premium base, but AM Best expects this to increase over the medium term as a result of planned investments and higher net acquisition costs. Nonetheless, AM Best expects TMI’s overall underwriting performance to remain favourable. TMI’s investment returns continue to remain supportive of overall earnings. Although the investment yield from government bonds and deposits declined in 2022, returns may benefit over the near term from higher domestic interest rates since the second half of 2022.

AM Best views TMI’s business profile as limited. TMI is a small-sized, non-life insurer in Indonesia, with a domestic market share of 2.5%, as measured by 2022 gross premium written. AM Best views the company’s portfolio to be diversified moderately by line of business with key lines including fire, marine and motor insurance, although with a geographic concentration in Indonesia. TMI benefits from preferential access to Japanese interest abroad (JIA) related risks in Indonesia given its affiliation and common branding with TMH. The company has also shown significant growth in non-JIA-related risks over time, particularly for marine cargo.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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