Manila: Global credit rating agency, AM Best has assigned a financial strength rating of B+ (Good), a long-term issuer credit rating of 'bbb-' (Good), and a Philippines National Scale Rating of aa.PH (Superior) to MAAGAP Insurance Inc (MAAGAP). The outlook assigned to these credit ratings carries a stable outlook, reflecting MAAGAP's strong balance sheet strength assessment, adequate operating performance, limited business profile, and appropriate enterprise risk management.

According to BERNAMA News Agency, MAAGAP's balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio, which is expected to remain at the strongest level over the medium term. The company's capital adequacy benefits in part from earnings retention in recent years and a low-to-moderate risk investment portfolio, with most investments allocated to Philippine government bonds and well-rated domestic corporate bonds.

A partially offsetting factor is MAAGAP's reliance on reinsurance to support the underwriting of catastrophe-exposed business. However, this risk is mitigated as the majority of its reinsurance recoverables are from counterparties with sound credit quality.

AM Best assesses MAAGAP's operating performance as adequate, with a five-year average return on equity of 8.8 percent for fiscal years 2021 to 2025. The company's underwriting performance showed some volatility over the period due to losses from natural catastrophes and large loss events.

However, remedial measures supported an improvement in underwriting results in fiscal year 2025, although the expense ratio recorded in recent periods remains an offsetting factor. Prospectively, this is expected to improve as the company grows its book of business and benefits from economies of scale. Additionally, investment returns, derived mainly from interest income, are viewed as stable and supportive of overall earnings.