Press Release - APRIL 27, 2017

A.M. Best Affirms Credit Ratings of National Reinsurance Corporation of the Philippines

 Wesley Chia
Associate Financial Analyst
+65 6589 8400, ext. 213

Chi-Yeung Lok
Associate Director, Analytics
+65 6589 8400, ext. 211

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of National Reinsurance Corporation of the Philippines (NRCP) (Philippines). The outlook of these Credit Ratings (ratings) remains negative.

The ratings reflect NRCP’s strong risk-adjusted capitalization and low net underwriting leverage.

NRCP’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supported by its low underwriting leverage. NRCP has low premium retention and cedes a significant portion of risk to a panel of highly rated retrocessionaires.

In terms of operating performance, NRCP’s loss ratio declined to 59% in 2016 from a high of 117% in 2013 following a series of portfolio remediation exercises. The company’s combined ratio also improved to 99% from 209% in the same period. There was a substantial increase in premiums written in 2016 compared with the preceding years. This was accomplished through more participation in overseas risks and venturing into new lines of business.

An offsetting rating factor is the potential volatility in NRCP’s underwriting performance. Although there has been a gradual improvement in overall underwriting results, the company’s underwriting margin remains thin. In addition, profitability is yet to be seen in its fast-expanding overseas portfolio. Investment performance, especially in the domestic equity markets, also has been unfavorable in recent years.

A revision back to a stable outlook could occur if the company can continue to demonstrate and sustain the trend of improvement in its underwriting profitability.

Negative rating actions may occur if there is material deterioration in operating performance or risk-adjusted capitalization.

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 A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.

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AMB# Company Name
086771 National Reinsurance Corp of Philippines