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A.M. Best Affirms Ratings of PT. Asuransi Samsung Tugu
[January 16, 2014]

A.M. Best Affirms Ratings of PT. Asuransi Samsung Tugu

HONG KONG --(Business Wire)--

A.M. Best Asia-Pacific Limited has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of "a-" of PT. Asuransi Samsung (News - Alert) Tugu (AST) (Indonesia). The outlook for both ratings is stable.

The ratings reflect AST's robust risk-adjusted capitalization, profitable operating performance, sound reinsurance arrangement and strong enterprise risk management (ERM) practice. The ratings also consider the support provided by the shareholders of Samsung Fire & Marine Insurance Co., Ltd. (SFM) and PT. Tugu Pratama Indonesia (TPI).

AST reported strong profitability in the past five years, with an average operating ratio of 53% owing to strong investment results and profitable underwriting results. Although AST reported a one-off loss from the write off of an amount due from a failed reinsurer in 2013, strong investment results offset the loss. In addition, AST strengthened its reinsurance program by further increasing the catastrophe coverage in 2013 in order to enhance the stability of its underwriting performance. AST maintains a solid ERM program and its standards are in line with SFM.

Offsetting rating factors include an increase in AST's riing cost structure, relatively rapid premium growth and its historically volatile investment results.

AST experienced rapid rises in expenses because of significant increases in personnel and rent costs in the past five years. As AST is still on a course of business expansion, it is inevitable that it will have high expenses in the next two to three years. The company reported volatile investment returns in the past five years, primarily due to the significant changes in foreign currency rates as investments are largely in USD-denominated assets. Although this conservative investment strategy led to a substantial profit in 2013, a sharp swing in foreign currency rates would lead to a negative impact on the company's profitability.

AST's ratings are well positioned at the current level. Downward rating pressures may be triggered by a substantial decline in the company's risk-adjusted capitalization and continuous deterioration in its underwriting results.

The methodology used in determining these interactive ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.

A.M. Best Asia-Pacific Limited is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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