AM Best Affirms Philippines Nat Re's Credit Ratings With Stable Outlook 

KUALA LUMPUR, Oct 10 (Bernama) -- Global credit rating agency, AM Best has affirmed the financial strength rating of B++ (Good), the long-term issuer credit rating of “bbb” (Good) and the Philippines National Scale Rating of aa+.PH (Superior) of National Reinsurance Corporation of the Philippines (Nat Re), with a stable outlook.

In a statement, AM Best said these credit ratings (ratings) reflected Nat Re’s strong balance sheet, adequate operating performance, neutral business profile and appropriate enterprise risk management.

Nat Re’s balance sheet strength is supported by its risk-adjusted capitalisation, which remained at the strongest level at the end of 2024 based on Best’s Capital Adequacy Ratio, as well as its good financial flexibility. The company’s investment portfolio carries a moderate level of risk, with most assets placed in fixed-income securities issued by the Philippine government.

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Although its retrocession programme partially mitigates the exposure, Nat Re's balance sheet remains vulnerable to major natural catastrophe events.

On operating performance, Nat Re recorded a five-year average return on equity of 4.8 per cent between 2020 and 2024, supported by an improved expense ratio arising from lower net acquisition costs and management expenses relative to earned premiums.

However, the company’s loss ratio in 2024 was affected by higher experience refunds to cedents and unfavourable prior-year claims development from its life portfolio. Investment income, mainly from interest and dividend earnings, continued to support Nat Re’s overall operating results.

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Going forward, AM Best expects Nat Re’s underwriting performance to benefit from portfolio remediation in its non-life reinsurance business and growth in its profitable life reinsurance and speciality segments.

As the country’s sole domestic reinsurer, Nat Re maintains strong relationships with local cedants and benefits from access to business through mandatory local cessions, the credit rating agency said.

The rating agency added that Nat Re is well-positioned to capture opportunities from government initiatives and new service offerings, including the development of underwriting facilities in the Philippine market, allowing it to expand beyond mandatory cession levels.

-- BERNAMA