Malaysia's Lonpac Insurance Credit Ratings Affirmed As Excellent - AM Best

KUALA LUMPUR, Dec 11 (Bernama) -- Global credit rating agency, AM Best has affirmed Malaysia’s Lonpac Insurance Bhd (Lonpac) financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent).

The stable outlook on these credit ratings (ratings) reflects Lonpac’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management, according to AM Best in a statement.

A mid-sized non-life insurer in Malaysia, Lonpac’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which was at the strongest level as of year-end 2024, as measured by Best’s Capital Adequacy Ratio, and is expected to remain at this level over the medium term.

The company maintains a generally conservative investment portfolio comprising cash, bonds and debt-focused unit trust funds. Its moderate reliance on reinsurance to support underwriting and manage catastrophe exposures is partially offset by the high credit quality of its reinsurance panel.

Lonpac’s operating performance is assessed as strong, with a return-on-equity ratio of 25.8 per cent in 2024. Underwriting margins have benefited from a low net loss experience in property and bond classes of business, as well as favourable reinsurance commission income, which remain the key drivers of technical profitability over recent periods.

Investment returns continue to be a stable contributor to the company’s overall earnings, with its year-to-date 2025 operating performance remains favourable, supported by stable underwriting profit and investment return.

Whilst AM Best expects Lonpac to maintain its strong operating performance over the medium term, supported by its disciplined underwriting approach, the ongoing phased liberalisation of motor and fire insurance pricing in Malaysia may constrain its underwriting margins.

With a market share of approximately eight per cent, based on 2024 gross direct premiums, Lonpac’s underwriting portfolio is diversified moderately by line of business, albeit with a majority of business originating from Malaysia.

-- BERNAMA