A.M. Best Revises Outlooks to Negative for PT Asuransi Tugu Pratama Indonesia, Tbk
The negative outlooks reflect rising concern over the effectiveness of TPI’s enterprise risk management framework (ERM) following the consolidation of its reinsurance business. The Credit Rating (rating) affirmations reflect TPI’s balance sheet strength, which
TPI’s risk-adjusted capitalization remains solid, supported by relatively low gross and net underwriting leverage, and conservative investment asset allocations, as well as the quality and diversity of its reinsurance panel. Its capital position is among the largest in Indonesia’s non-life market. TPI has a track record of strong operating performance supported by underwriting and investment results. Its combined and operating ratios averaged 79% and 60%, respectively, in the five years to
Offsetting rating factors include rising concern about TPI’s ERM. With the recent consolidation of PT Tugu Reasuransi Indonesia, reinsurance business represents a significant portion of overall premiums written. However, an effective consolidated ERM framework that also includes the reinsurance business is only at an early stage, raising the risk of unexpected volatility. Although overall underwriting margins remained good in the first half of 2018, these were reduced by unfavorable results from the reinsurance business. In addition, overall results have been affected by investment and currency volatility.
Negative rating action could result from a significant deterioration in operating performance or unexpected volatility due to gaps in ERM.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and
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