Malayan adjusts portfolio to lower investment risks

The insurer is seen to have a five-year average ROE ratio of 3.8%.

Philippine-headquartered Malayan Insurance’s underwriting performance remains supported by ongoing portfolio remediation measures, as well as business growth in more profitable retail segments, assessed AM Best.

Despite profitable total operating earnings in 2023, Malayan reported an underwriting loss, partly due to lower reinsurance commission income. 

The company's underwriting performance has been moderately volatile, impacted by catastrophes and large loss events, particularly in its core commercial lines. 

However, positive technical results in the motor business have partially offset the decline in underwriting results. Investment income remains the primary contributor to Malayan’s overall earnings, helping maintain a track record of positive earnings. 

Malayan also showed a strong balance sheet, which is supported by its risk-adjusted capitalisation, measured by Best’s Capital Adequacy Ratio (BCAR) at the strongest level. 

The company has seen improvements in risk-adjusted capitalisation in 2023, driven by ongoing reinsurance claims settlements that have reduced its credit risk exposure. 

Additionally, recent steps to de-risk Malayan’s investment portfolio have lowered its exposure to equity investment risk. 

However, the company’s heavy reliance on reinsurance for underwriting large commercial risks and exposure to non-rated counterparties on an international financial strength scale is seen as offsetting factors. 

The balance sheet is also considered sensitive to potential shock events, particularly multiple severe catastrophe events in a short period.

AM Best assesses Malayan’s operating performance as adequate, with a five-year average return-on-equity ratio of 3.8% from 2019 to 2023.