AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of PT Asuransi Tokio Marine Indonesia (TMI) (Indonesia). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect TMI’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management. In addition, the ratings factor in rating enhancement from Tokio Marine & Nichido Fire Insurance Co., Ltd., which is the main insurance operating entity of Tokio Marine Holdings, Inc. (TMH).

TMI’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), has deteriorated to the very strong level as at year-end 2023. The company’s exposure to reinsurance credit risk has risen significantly in 2023 given recent large claims that were ceded to domestic (re)insurance counterparties of lower credit quality. Notwithstanding this, capital adequacy is projected to recover following reinsurance settlements over the near to medium term. The company has demonstrated strong internal capital generation, with average annual shareholders’ equity growth of 11.5% over the past five years (2019-2023). In addition, TMI has a conservative investment portfolio composed of mainly government bonds, cash and deposits.

AM Best assesses TMI’s operating performance as strong, evidenced by a five-year average combined ratio of 85% and return-on-equity ratio of 18% (2019-2023). The company’s underwriting performance remained robust in 2023 with a combined ratio of 84%. The loss ratio improved marginally in 2023 supported by more favourable loss experience on its marine cargo and engineering lines, although partially offset by higher losses in fire insurance. In addition, TMI’s investment returns from interest income remain a stable contributor to overall earnings.

AM Best views TMI’s business profile as limited. TMI is a small-sized, non-life insurer in Indonesia, with a domestic market share of 2.1%, as measured by 2023 gross premium written. AM Best views the company’s portfolio to be diversified moderately by line of business with key lines including fire, marine and motor insurance, although with a geographic concentration in Indonesia. TMI benefits from preferential access to Japanese interest abroad (JIA) related risks in Indonesia given its affiliation and common branding with TMH. The company also has shown significant growth in non-JIA-related risks over time, particularly for marine cargo.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

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