AM Best

AM Best Affirms Credit Ratings and Assigns National Scale Rating to National Reinsurance Corporation of the Philippines


Sin Yee Chuah, CFA
Senior Financial Analyst
+65 6303 5022

Chris Lim, FCII, CFA
Associate Director, Analytics
+65 6303 5018

Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310

Al Slavin
Senior Public Relations Specialist
+1 908 882 2318


AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of National Reinsurance Corporation of the Philippines (Nat Re) (Philippines). Additionally, AM Best has assigned the Philippines National Scale Rating (NSR) of aa+.PH (Superior) to Nat Re. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Nat Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Nat Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which remained at the strongest level in 2022. AM Best views the company’s investment portfolio as having moderate risk. Despite some exposure to corporate bonds and equity investments, the majority of Nat Re’s portfolio is composed of fixed income securities issued by the Philippines’ government. The company’s allocation to equity investments has gradually reduced over recent years, with the expectation of continued portfolio de-risking over the medium term. Nat Re’s balance sheet is sensitive to natural catastrophe exposure, although this risk is partially mitigated through the use of retrocession.

Nat Re’s operating performance is assessed as adequate, with a five-year average return-on-equity ratio of 2.3% (2018-2022). Net profit declined in 2022 compared to the prior year. While the company reported lower underwriting losses in 2022, compared to 2021, the improvement was outweighed by lower investment income, which was partially impacted by investment impairment and fair value losses on equity investments. Although Nat Re’s underwriting performance improved in 2022, it continued to show a lack of profitability, mainly driven by unfavourable reserve development in its foreign non-life portfolio and higher than expected COVID-19 related claims. Investment income arising mainly from interest and dividend income continues to contribute positively to operating earnings despite declining in 2022. AM Best expects Nat Re’s prospective underwriting performance to be supported by ongoing portfolio remediation measures, including reduced participation and/or exiting from unprofitable non-life treaties, as well as business growth in the more profitable domestic life reinsurance segment and other specialty lines.

AM Best views Nat Re’s business profile as neutral. The company is the only domestic reinsurer in the Philippines, benefiting from strong relationships with local cedants and access to business through mandatory local cessions. Nat Re is well-positioned for business opportunities emanating from local government initiatives, this includes its engagement in the design and launch of underwriting facilities in the Philippines market, which enables it to write greater business volumes in excess of the level stipulated by the mandatory cessions. The company’s underwriting portfolio is viewed to be moderately diversified by geography and it writes both non-life and life reinsurance. In recent years, Nat Re’s shift in product mix towards the domestic life reinsurance segment has supported its improvement in portfolio diversification.

AM Best considers Nat Re’s ERM approach to be appropriate given the current size and complexity of its operations. The company’s risk management framework and corporate governance capabilities are viewed to have strengthened over recent years.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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.

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AMB# Company Name
086771 National Reins Corp of the Philippines