Reinsurance risks increase at Tokio Marine Indonesia

As a small non-life insurer in Indonesia, TMI holds a 2.1% market share.

Tokio Marine Indonesia (TMI) is expected to keep a “stable outlook” on the back of a strong balance sheet, robust operating performance, limited business profile, and effective enterprise risk management, AM Best said.

Additionally, AM Best’s recent ratings for the insurer benefit from enhancement due to TMI's affiliation with Tokio Marine & Nichido Fire Insurance Co., Ltd., the main insurance entity of Tokio Marine Holdings, Inc. (TMH).

TMI’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), declined to a very strong level at the end of 2023. 

The company's reinsurance credit risk exposure increased significantly in 2023 due to large claims ceded to lower-quality domestic reinsurers. Despite this, capital adequacy is expected to recover following reinsurance settlements in the near to medium term. 

TMI has demonstrated strong internal capital generation, with an average annual shareholders’ equity growth of 11.5% over the past five years (2019-2023). TMI’s conservative investment portfolio mainly includes government bonds, cash, and deposits.

ALSO READ: Tokio Marine dR adopts Fathom data for disaster prep

AM Best assesses TMI’s operating performance as strong, with a five-year average combined ratio of 85% and a return-on-equity ratio of 18% (2019-2023). 

In 2023, the combined ratio was 84%, with an improved loss ratio due to favourable results in marine cargo and engineering lines, offset by higher fire insurance losses. Investment returns from interest income continue to contribute to overall earnings.

TMI’s business profile is viewed as limited by AM Best. As a small non-life insurer in Indonesia, TMI holds a 2.1% market share based on 2023 gross premiums written. The company’s portfolio is moderately diversified by line of business, including fire, marine, and motor insurance, but is geographically concentrated in Indonesia. 

TMI benefits from preferential access to Japanese interest abroad (JIA) related risks in Indonesia due to its affiliation with TMH. The company has also grown significantly in non-JIA-related risks, particularly in marine cargo.