Energas Insurance (L) Limited (ENERGAS), a key player in Malaysia’s insurance market, is currently grappling with performance challenges as rising claims frequency has affected its operating results, according to a recent report by AM Best.
Despite a period of underwriting deterioration in recent years, Energas experienced a positive shift in its performance during the first nine months of 2024. This improvement was primarily driven by better loss experience and higher premium rates. However, AM Best cautioned that the long-term effectiveness of Energas’ corrective measures remains uncertain and is subject to execution risks.
Energas continues to maintain a robust balance sheet, with its risk-adjusted capitalization assessed at the highest level according to Best’s Capital Adequacy Ratio (BCAR). The insurer’s investment portfolio remains conservative, primarily consisting of cash, deposits, and high-quality government and corporate bonds.
While low net underwriting leverage has helped keep capital requirements under control, there is potential for balance sheet volatility if large losses occur across multiple policies. Fortunately, this risk is mitigated through reinsurance strategies.
AM Best views Energas’ business profile as neutral. As a single-parent captive of Petroliam Nasional Berhad (PETRONAS), the insurer benefits from access to the group’s diverse insurance risks. However, its underwriting portfolio remains heavily concentrated in Malaysia’s upstream and downstream energy sectors.
Despite these challenges, Energas’ financial strength is considered stable, with its future performance contingent on the successful implementation of corrective measures
Related topics
