Malayan Insurance, headquartered in the Philippines, is enhancing its portfolio to reduce investment risks, according to AM Best. The company’s underwriting performance remains bolstered by strategic portfolio adjustments and growth in more lucrative retail segments. Despite recording profitable operating earnings in 2023, Malayan faced an underwriting loss due to a decline in reinsurance commission income.
The company’s underwriting performance has experienced some volatility, influenced by major loss events and catastrophes, especially within its core commercial lines. However, gains in the motor insurance sector have partially counterbalanced the downturn in underwriting results. Investment income continues to be a key driver of Malayan’s overall profitability.
Malayan’s balance sheet demonstrates strength, supported by robust risk-adjusted capitalization, with its Best’s Capital Adequacy Ratio (BCAR) at a high level. Improvements in risk-adjusted capitalization in 2023 are attributed to ongoing settlements of reinsurance claims, which have mitigated credit risk exposure. Recent measures to de-risk the investment portfolio have also reduced equity investment risk.
Nonetheless, the company’s heavy dependence on reinsurance for large commercial risks and exposure to non-rated international counterparts are seen as limiting factors. The balance sheet remains sensitive to potential shocks, particularly from severe catastrophe events occurring in quick succession. AM Best assesses Malayan’s operational performance as adequate, with a five-year average return on equity of 3.8% from 2019 to 2023.
