PT Asuransi Mitra Pelindung Mustika (MPM Insurance) has seen stable profits, with positive growth in its key performance metrics, according to a recent report by Fitch Ratings.
The company’s Gross Premium Written (GPW) grew by 23% in the first nine months of 2024, rebounding from a 4% decline in 2023. This growth was primarily attributed to a shift in focus toward motor and property insurance, which together contributed 30% and 43% of total GPW, respectively, as of September 2024. A strategic reduction in exposure to multipurpose credit insurance also played a role, with this segment now accounting for only 0.4% of the total GPW.
Despite a rise in the combined ratio, which increased to 98% in 2024 from 96% in 2023 due to higher commission and operating expenses linked to business expansion, profitability has remained resilient. MPM Insurance’s return on equity also improved, rising to 9% from 7% the previous year, underpinned by strong investment yields.
The company’s regulatory risk-based capital (RBC) ratio stood at a robust 388% as of September 2024, well above the minimum regulatory requirement. This was bolstered by reserve releases and increased admitted assets. However, MPM Insurance’s capital base remains modest in comparison to larger domestic insurers.
A key challenge for MPM Insurance is its ongoing reliance on reinsurance recoverables, which represented 118% of its capital base by the end of September 2024. This dependence remains a risk, especially considering the declining credit quality of some domestic reinsurers. However, Fitch highlighted the company’s efforts to mitigate this risk by reducing its reliance on these entities.
MPM Insurance continues to maintain a conservative investment strategy, with liquid assets such as cash and fixed-income securities making up approximately 80% of its portfolio between 2021 and 2023. This approach is expected to persist, providing the company with stability and a diversified investment mix in the face of market fluctuations.
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