AM Best Upgrades Malaysia’s Tune Protect Re Issuer Credit Rating 

KUALA LUMPUR, Dec 13 (Bernama) -- Global credit rating agency, AM Best has upgraded Malaysia’s Tune Protect Re Ltd (TPR) long-term issuer credit rating (long-term ICR) to “bbb+” (good) from “bbb” (good) and affirmed the financial strength rating (FSR) of B++ (good).

In addition, AM Best, in a statement, said it has revised the long-term ICR outlook to stable from positive, while the outlook of the FSR is stable.

The credit ratings (ratings) reflect TPR’s balance sheet strength, which the credit rating agency assesses as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

bootstrap slideshow

The upgrade of the Long-Term ICR reflects an improvement in the company’s operating performance in recent periods. Despite exhibiting volatile premium growth and operating earnings during the COVID-19 pandemic, the growth of the travel insurance operation has since normalised, resulting in more stable underwriting performance.

In 2023, TPR reported a robust combined ratio (net-net) of 84.6 per cent and a return-on-equity ratio of 16.4 per cent (as calculated by AM Best). In the first three quarters of 2024, TPR’s operating performance remains favourable, supported by strong technical profitability and investment performance.

TPR’s balance sheet strength is supported 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.

bootstrap slideshow

The company maintains a conservative investment portfolio, predominantly in unit trust funds with high-quality fixed-income securities. However, its modest-sized absolute capital base of US$33 million at the end of 2023, compared with its peer reinsurers, exposes the company to potential volatility in stressed scenarios. (US$1=RM4.43)

AM Best’s balance sheet strength analysis also incorporates a neutral holding company impact from Tune Protect Group Berhad (TPG), TPR’s ultimate parent.

Although TPR’s business profile is considered limited given its position as a niche reinsurer with a focus on travel-related insurance products, it benefits from leveraging TPG’s in-house technology platform to support and distribute policies in collaboration with corporate partners, including airlines and travel agencies. Over the medium term, TPR is expected to exhibit moderate underwriting growth.

-- BERNAMA