AM Best Downgrades Petronas Captive Insurer ENERGAS

KUALA LUMPUR, March 13 (Bernama) -- AM Best has downgraded the financial strength rating to A- (Excellent) from A (Excellent) and the long-term issuer credit rating to “a-” (Excellent) from “a” (Excellent) of Malaysia’s Energas Insurance (L) Limited (ENERGAS).

In a statement, the global credit rating agency said the outlook of these credit ratings (ratings) has been revised to stable from negative.

The ratings reflect ENERGAS’ very strong balance sheet strength, adequate operating performance, neutral business profile and appropriate enterprise risk management. The assessment also factors in neutral support from its parent company, Petroliam Nasional Berhad (Petronas), Malaysia’s national oil and gas company.

The rating downgrades reflect a trend of deterioration and increased volatility in ENERGAS’ operating performance in recent years, with higher-than-expected frequency of large losses resulting in large underwriting deficits for the company. Underwriting performance in 2025 remained negatively impacted by adverse loss experience, soft market conditions and reserve strengthening.

However, ongoing portfolio remediation measures are expected to support earnings recovery over the medium term, while investment income continues to provide a strong contribution to overall profitability.

ENERGAS’ balance sheet strength remains supported by robust risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio. The insurer maintains a conservative investment portfolio, largely allocated to cash, deposits and high-quality government and corporate bonds.

AM Best also noted that ENERGAS relies significantly on reinsurance to manage risk accumulation, which may expose the company to changes in reinsurance capacity and pricing.

As a single-parent captive insurer to Petronas, ENERGAS benefits from access to the group’s insurance risks. However, its underwriting portfolio remains concentrated by business line and geography, particularly in upstream and downstream energy risks in Malaysia.

-- BERNAMA