A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Lonpac Insurance Bhd (Lonpac) (Malaysia). The outlook of these Credit Ratings (ratings) is positive.
The rating affirmations reflect Lonpac’s strong risk-adjusted capitalization and very strong track record of operating performance. The company’s risk-adjusted capitalisation is supported by a consistent and strong internal capital generation ability that has kept its underwriting leverage low.
Lonpac generates one of the highest underwriting margins in Malaysia’s non-life market, and its performance has been very strong compared with its peers based on variety of measures.
An offsetting rating factor is the transition to a liberalized market environment.
To maintain its very good profitability, Lonpac will need to develop and maintain strong pricing capabilities relative to the large international players that it competes against.
Positive rating actions could occur if Lonpac is able to maintain its profitability as a phased liberalization of tariffs occurs. Downward rating actions could arise from weakening in profitability.