PT Asuransi's capital strength to stay strong into medium-term

AM Best views TUGU’s investment portfolio to be of moderate risk.

PT Asuransi Tugu Pratama Indonesia’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is expected to remain at the strongest level over the medium term, as measured by AM Best’s Capital Adequacy Ratio (BCAR). 

AM Best views TUGU’s investment portfolio to be of moderate risk and generally diversified, with the majority of investments allocated to bonds and time deposits and the remainder held in investment properties and equity investments. 

An offsetting factor is TUGU’s dependence on reinsurance to support the underwriting of large commercial risks, including fire, aviation and energy business, and to manage its exposure to severe catastrophe events. 

The majority of reinsurance assets are of good credit quality, although TUGU maintains some exposure to reinsurance counterparties that are not rated on an international financial strength rating scale.

AM Best views the company’s operating performance as strong, amidst profit after tax increasing to $91.1m in 2023, an improvement of 229.5% when compared with 2022, largely driven by a one-off gain from a long-standing litigation case. 

Improvement in the full-year 2024 underwriting performance result is expected to be supported by ongoing portfolio remediation measures; however, technical earnings may remain volatile over the near term, as has been witnessed in recent periods.