AM Best Downgrades Credit Ratings of PT Asuransi Jasa Indonesia; Maintains Under Review With Negative Implications Status
SINGAPORE–(BUSINESS WIRE)–#insurance—AM Best has downgraded the Financial Strength Rating to B (Fair) from B++ (Good) and the Long-Term Issuer Credit Rating to “bb+” (Fair) from “bbb” (Good) of PT Asuransi Jasa Indonesia (Asuransi Jasindo) (Indonesia). Concurrently, AM Best has maintained the under review with negative implications status for these Credit Ratings (ratings).
The ratings reflect Asuransi Jasindo’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management (ERM).
The ratings of Asuransi Jasindo were placed under review with negative implications on 19 May 2021, following a significant deterioration in underwriting performance emanating from the company’s credit insurance business. The under-review status reflected uncertainty surrounding the company’s latest financial position, pending finalisation of its audited 2020 financial statements, as well as to allow AM Best to further consider the timeliness and effectiveness of planned remedial actions.
The latest rating actions follow a delay in the finalisation of the company’s 2020 audited financial statements and AM Best’s increased concern over the loss exposure emanating from the company’s credit insurance business. The rating downgrades reflect a deterioration in AM Best’s view of Asuransi Jasindo’s balance sheet strength and ERM fundamentals.
While capital management actions continue to be evaluated and advanced by the company, the recent negative trend and volatility in the company’s balance sheet, including its reserving position and capital adequacy, has led to a weakened balance sheet strength assessment. Whilst the company’s 2020 audited financial statements have yet to be finalised, summarised regulatory filings for 2020 and the first quarter of 2021 indicated a marked deterioration in operating performance, as well as reserve strengthening and capital erosion, which have led to a significant fall in the company’s local regulatory solvency ratio. As of 31 March 2021, the company’s solvency ratio was only marginally above the minimum regulatory requirement. In addition, AM Best’s revision of the company’s ERM assessment to marginal reflects recently observed governance and control deficiencies with respect to underwriting risk and capital management.
The maintaining of the under review with negative implications status reflects continued uncertainty arising from the ongoing delay in the release of the company’s 2020 audited financial statements. In addition, AM Best will continue to monitor the execution of planned remedial actions, as well as their impact on prospective balance sheet strength and operating performance fundamentals. The ratings will remain under review until AM Best can fully assess the impact of these factors on Asuransi Jasindo’s credit rating fundamentals.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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Contacts
Chris Lim
Senior Financial Analyst
+65 6303 5018
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Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
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Myles Gould
Senior Director, Analytics
+65 6303 5020
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Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
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