Kuala lumpur: AM Best has downgraded the financial strength rating of Malaysia's Energas Insurance (L) Limited (ENERGAS) to A- (Excellent) from A (Excellent) and the long-term issuer credit rating to 'a-' (Excellent) from 'a' (Excellent). The global credit rating agency announced that the outlook on these ratings has been revised to stable from negative.
According to BERNAMA News Agency, the ratings reflect ENERGAS' strong balance sheet strength, adequate operating performance, neutral business profile, and appropriate enterprise risk management. The assessment also considers neutral support from its parent company, Petroliam Nasional Berhad (Petronas), Malaysia's national oil and gas company.
The downgrade in ratings is attributed to a trend of deterioration and increased volatility in ENERGAS' operating performance over recent years. The company has experienced higher-than-expected frequency of large losses, leading to significant underwriting deficits. The underwriting performance in 2025 has been adversely affected by unfavorable loss experiences, soft market conditions, and reserve strengthening.
Despite these challenges, ongoing portfolio remediation measures are anticipated to aid in earnings recovery over the medium term, while investment income continues to contribute positively to overall profitability. ENERGAS' balance sheet strength is reinforced by robust risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio. The insurer maintains a conservative investment portfolio, primarily allocated to cash, deposits, and high-quality government and corporate bonds.
AM Best noted that ENERGAS significantly relies on reinsurance to manage risk accumulation, which may expose the company to changes in reinsurance capacity and pricing. As a single-parent captive insurer to Petronas, ENERGAS benefits from access to the group's insurance risks. However, its underwriting portfolio remains concentrated by business line and geography, particularly in upstream and downstream energy risks in Malaysia.