DEBT WATCHER AM Best has affirmed its ratings for Malayan Insurance Co., Inc. but revised the outlooks to “negative” from “stable” due to losses from catastrophes and other events.
AM Best affirmed Malayan Insurance’s financial strength rating (FSR) of B++ (Good), long-term issuer credit rating of “bbb” (Good) and Philippines national scale rating of aa+.PH (Superior), it said in a statement on Aug. 21. However, it downgraded its outlooks for these ratings to negative.
“The credit ratings reflect Malayan’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. In addition, the ratings factor in a neutral impact from the company’s ultimate ownership by Pan Malayan Management and Investment Corp.,” it said.
“The revised outlooks to negative from stable reflect continued pressure on Malayan’s operating performance fundamentals, mainly due to underwriting performance volatility driven by catastrophe and large loss events in recent periods,” AM Best added.
The credit rater noted that Malayan Insurance posted underwriting losses during three of the last five years with a five-year average combined ratio of 105.6%.
“In 2024, while total operating earnings remained profitable, the company reported an underwriting loss, driven by elevated catastrophe losses that negatively impacted the company’s core commercial lines. Investment income continues to be the principal contributor to Malayan’s overall earnings, supporting the company’s track record of positive earnings,” it said.
“For the first half of 2025, the company recorded an underwriting loss largely driven by adverse loss reserve development on prior periods.”
AM Best said they expect the nonlife insurer’s underwriting profitability to improve on the back of its ongoing portfolio remediation measures.
Meanwhile, it said Malayan Insurance’s balance sheet remains robust, backed by its risk-adjusted capitalization that it expects to “remain at the strongest level over the medium term.”
“Nonetheless, the company’s risk-adjusted capitalization is viewed to be sensitive to shock events, particularly arising from the occurrence of multiple severe catastrophe events in short succession. Offsetting factors include the company’s high reliance on reinsurance to support the underwriting of large commercial risks and its exposure to counterparties that are non-rated on an international FSR scale,” it said.
“AM Best views Malayan’s investment portfolio to have moderate risk, comprising mainly fixed-income securities and a moderate exposure to equity investments,” it added.
Meanwhile, AM Best’s neutral business profile assessment for the company reflects Malayan Insurance’s position as one of the largest nonlife insurance companies in the Philippines based on gross premiums written. “The company benefits from its affiliation with the Yuchengco Group of Companies, a large conglomerate in the Philippines, in terms of branding and distribution.”
Malayan Insurance recorded P15.07 billion in gross premiums written in 2024, data from the Insurance Commission showed, ranking second among nonlife insurers.
In a separate statement, Malayan Insurance said AM Best’s affirmation of its credit ratings show its financial resilience despite a challenging operating environment.
“While the outlooks have been revised to negative from stable, this adjustment reflects recent factors that are affecting the industry, resulting in underwriting performance volatility. Despite this, Malayan has maintained a track record of positive overall earnings, with investment income serving as a principal contributor to its profitability, ensuring consistent financial performance despite these external pressures,” the nonlife insurer said.
“The recent pressures on underwriting performance are a reflection of the current industry landscape, especially with the increased natural catastrophes affecting the entire sector. However, Malayan remains fully committed to navigating these conditions with resilience and strategic agility,” Malayan Insurance Chief Executive Officer Paolo Y. Abaya said.
The insurer added that it will continue its digital transformation as part of its long-term growth strategy.
Malayan Insurance booked a net income of P340.56 million and assets worth P40.92 billion in 2024. — A.M.C. Sy
