Malaysian Re's conservative investments bolster balance sheet

AM Best forecasts strong capitalization for Malaysian Reinsurance Berhad.

Malaysian Reinsurance Berhad's balance sheet strength is bolstered by its very strong risk-adjusted capitalisation, expected to remain robust over the medium term, AM Best projected. 

Despite a recent decline in regulatory solvency ratio due to business growth and losses, strengthened by 2022 subordinated debt issuances. 

Malaysian Re maintains a conservative investment portfolio, predominantly in term deposits, government bonds, and high-quality corporate bonds. 

Catastrophe risk exposure is managed through retrocession coverage with well-rated counterparties.

Operating performance is deemed adequate, with a five-year average return-on-equity ratio of 5.2% and a combined ratio of 101.1% from fiscal years 2019 to 2023. 

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Whilst underwriting performance has faced volatility due to catastrophe and large losses, investment income remains a positive contributor. 

Prospects for improved underwriting performance are supported by portfolio remediation measures and ongoing business remodelling.

As the largest non-life reinsurer in Malaysia, Malaysian Re benefits from a dominant domestic market share and regulatory cession arrangement, ensuring access to profitable domestic business until 2024. 

The company aims to diversify its underwriting portfolio geographically and through non-traditional products and specialty lines, enhancing future growth prospects.