AM Best Assigns Excellent Credit Ratings To Indonesia’s Lippo General Insurance
KUALA LUMPUR, Oct 30 (Bernama) -- Global credit rating agency, AM Best has assigned a financial strength rating of A- (Excellent), a long-term issuer credit rating of “a-” (Excellent) and the Indonesia National Scale Rating (NSR) of aaa.ID (Exceptional) to Indonesia’s PT Lippo General Insurance Tbk (LGI).
In a statement, AM Best said these credit ratings (ratings), which have a stable outlook, reflected LGI’s strong balance sheet, adequate operating performance, neutral business profile and appropriate enterprise risk management, as well as support from its ultimate parent, Hanwha Life Insurance Co Ltd (Hanwha Life).
AM Best assessed LGI’s risk-adjusted capitalisation as very strong under its Capital Adequacy Ratio, supported by steady internal capital generation. While the insurer maintains moderate capital with high underwriting leverage, its focus on low-volatility health and credit insurance limits exposure.
The company’s credit risk remains notable due to reliance on domestic (re)insurers with weaker credit quality, though a moderate allocation to top-rated global reinsurers in its excess of loss programme helps offset this risk. Its investment portfolio is moderately conservative, dominated by bonds and time deposits.
LGI’s five-year (2020-2024) return on equity stands at eight per cent, with a combined ratio of 98.3 per cent, reflecting adequate profitability despite volatility from COVID-19 and rising medical costs.
The insurer has responded with rate adjustments and portfolio diversification, maintaining a low expense ratio compared to domestic industry peers and achieving a four per cent average investment yield.
A medium-sized non-life insurer, LGI has built a strong foothold in health insurance and is expanding into credit insurance, driving recent growth. Its business remains largely broker-driven, though distribution channels are diversifying.
AM Best noted strategic integration with Hanwha Life, citing plans to rebrand as Hanwha in the coming years. LGI benefits from digital, product, and managerial support from the Hanwha Life and Hanwha General Insurance Company Limited (a subsidiary of Hanwha Life), and AM Best expects capital backing when needed.
-- BERNAMA