PT Asuransi Tugu Pratama sustains strong operating performance: AM Best

The Indonesian insurer is expected to have volatile underwriting in the short to medium term.

Indonesia’s PT Asuransi Tugu Pratama’s (TUGU) business diversification is projected to benefit from strategic expansion toward the reinsurance space and retail business over time, AM Best said.

However, this could influence underwriting volatility in the short to medium term.

TUGU was also described as having a sturdy balance sheet strength, strong operating performance, neutral business profile, and appropriate enterprise risk management.

Its balance sheet strength is supported by robust risk-adjusted capitalisation and a moderately diversified investment portfolio. 

However, the company's reliance on reinsurance for large commercial risks, including aviation and energy businesses, presents a potential challenge. 

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Despite a recent deterioration in underwriting performance, TUGU's operating performance remains strong, largely driven by profitable business from its parent group, Pertamina. 

The company's business profile is considered neutral, with a significant market position in Indonesia's non-life insurance market and a focus on commercial and industrial risks. 

Strategic expansion into the reinsurance sector and retail business may enhance diversification but could also lead to increased underwriting volatility.