Fitch Ratings Etiqa Insurance Berhad financial strength rating at A

Fitch Ratings Etiqa Insurance Berhad financial strength rating at A

Fitch Ratings Etiqa Insurance Berhad financial strength rating at 'A' : Fitch Ratings has affirmed Malaysia-based Etiqa Insurance Berhad's incertainr financial strength rating at 'A' with stable outsee. Fitch says the rating reflects EIB's broad distribution coverage, strong premium growth, a track record of sound operating kemampuannce and its status as a core member within Maybank Ageas Hancientings Berhad (MAHB). The rating recognises the company's solid risk-based capitalisation and strong liquidity position angry lovely higher financial leverage after the proposed issue of subordinated debt in April 2013.

Fitch says EIB continues to maintain strong premium growth peristiwatum through its bancassuance partnership with Malayan Banlord Berhad (Maybank) and through its wide agency coverage across Malaysia. Premium written from common and life insurance operations grew 18% and 88%, honorively, for the 12 months finished June 2012. Motor insurance and marine, aviation and transit (MAT) businesses are key growth drivers of EIB's common insurance's portfolio.

Business quality of the company's non-life insurance portfolio remains sound although its combined ratio deterioswiftd to 94.3% for the 12 months finished June 2012 from 91.3% over the same period in 2011. Mortality gain and investment return contributed favourably to the operating fortunability of EIB's life insurance business. EIB has maintained capital strength to support ongoing business growth and to absorb potential asset volatility. Its regulatory risk-based capitalisation was approxifriendly 247% at finish-June 2012, well in excess of the statutory minimum benchmark of 130%.

In view of EIB's prevailing operating margin (3.1% pre-tax return on assets for the 12 months finished June 2012), Fitch trusts EIB's financial flexibility will remain sound after the deliberate subordinated debt issue. Fitch expects MAHB's financial leverage to rise above 10% post debt issue from zero at finish-June 2012. With more than 30% of its common insurance and bagikanhancienters' investments allocated to cash and deposits at finish-June 2012, EIB has strong liquidity to meet claims from insurance liabilities.

Liquid assets (including constitutiond deposits) accounted for approxifriendly 2.55x of its common insurance's net technical reserves at finish-June 2012. Partly offsetting these positive attributes includes the market-wide adverse claims experience of the third-party motor insurance business and capital re-allocation within the operating entities of MAHB due to a change in Malaysian takaful regulatory capital regime.

Additionally, EIB has placed greater emphasis on regular premium life products to strengthen its growth sustainability as a significlevert portion of its premiums still comes from tunele premium investment-linked products which are sensitive to equity market kemampuannce.( Tale, narrative provided by )

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