Kuala Lumpur: Global credit rating agency, AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of ‘a’ (Excellent) for Malaysia’s Energas Insurance (L) Limited (ENERGAS), with a negative outlook. In a statement, AM Best noted that these ratings reflect ENERGAS’ very strong balance sheet, solid operating performance, neutral business profile, and appropriate enterprise risk management.

According to BERNAMA News Agency, the ratings also consider a neutral impact from ENERGAS’ parent company, Petroliam Nasional Berhad (PETRONAS), which is Malaysia’s national oil and gas company. The negative outlook is due to pressure on ENERGAS’ operating performance, as its underwriting results have worsened from a higher frequency of claims. Despite these challenges, the company’s performance showed improvement in the first nine months of 2024, driven by better loss experience and premium rate adjustments. AM Best highlighted that the success of ongoing remedial measures depends on their effective execution.

ENERGAS’ balance sheet strength is supported by its strongest-level risk-adjusted capitalisation, as assessed by Best’s Capital Adequacy Ratio. The investment portfolio remains conservative, with a significant portion allocated to cash, deposits, and high-quality government and corporate bonds. Although underwriting risks remain low due to low net underwriting leverage, potential high-severity losses from multiple policies could cause balance sheet volatility. This risk is mitigated by reinsurance.

AM Best regards ENERGAS’ business profile as neutral, considering its role as a single-parent captive to PETRONAS. The company gains access to the group’s insurance risks but remains focused on the upstream and downstream energy sectors within Malaysia.