Philippines' sole professional reinsurer receives strong financial rating

Philippines’ sole professional reinsurer receives strong financial rating | Insurance Business Asia

Reinsurance

Philippines’ sole professional reinsurer receives strong financial rating

Total investment assets of the firm valued at PHP9.2 billion

Reinsurance

By
Kenneth Araullo

Philippine Rating Services Corporation (PhilRatings) has assigned the National Reinsurance Corporation of the Philippines (Nat Re), the nation’s sole professional reinsurer, a financial strength rating of PRS A with a stable outlook, signifying that Nat Re possesses strong financial security characteristics, though it may be more susceptible to adverse business conditions than insurers with higher ratings.

Nat Re’s stable outlook indicates the likelihood of this rating remaining consistent over the next 12 months. This rating and outlook reflect several factors, including Nat Re’s established market presence, reputable shareholders, experienced management team, sound investment portfolio, and robust capitalization.

As of the end of 2022, Nat Re’s total investment assets were valued at PHP9.2 billion, increasing to PHP9.7 billion by the end of June 2023. The company’s investment portfolio is predominantly low-risk, with 92.4% allocated to fixed income investments and 7.6% to equities as of end-June 2023. Government securities form most of the fixed income portfolio, followed by corporate bonds. For equity investments, companies listed on the Philippine Stock Exchange (PSE) comprise 94%.

With an equity of PHP5.8 billion as of end-September 2023, Nat Re comfortably exceeds the minimum net worth requirement of P3.0 billion set by the Insurance Commission (IC). The company’s risk-based capital (RBC) ratio also significantly surpasses the IC’s minimum requirement of 100%. Nat Re anticipates maintaining compliance with regulatory capitalization standards in the future.

Nat Re is unique in the Philippine insurance market as it is the only domestic professional reinsurance firm. Legislatively, it has the advantage of being entitled to a minimum of 10% of all outward reinsurance business from domestic insurance companies.

This privilege also provides Nat Re with significant access to local reinsurance business and insight into the reinsurance needs of domestic insurers.

The state-owned Government Service Insurance System (GSIS) is the largest shareholder in Nat Re, holding a 25.8% stake. The Yuchengco Group’s Mico Equities, Inc. (MEI) and the Bank of the Philippine Islands (BPI) are other major shareholders, with ownership interests of 12.9% and 13.7%, respectively.

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