Asei battles weak underwriting, high reserves in 2024: Fitch Ratings

Underwriting performance deteriorated, with combined ratio surging to 187% in ‘24.

Asuransi Asei Indonesia's financial outlook remains challenging, with capital volatility, weak underwriting performance, and declining premiums weighing on its near- to medium-term prospects, according to Fitch Ratings. 

Whilst its equity capital of IDR467b at the end of 2024 remains above the regulator's new 2026 requirement of IDR250b, high reserve fluctuations continue to undermine its capital stability.  

Financial leverage increased to 51% in 2024 from 47% in 2023 due to a subordinated loan of IDR407b from parent company PT Reasuransi Indonesia Utama (Persero), which Asei has held since 2017-2018 with no maturity date. 

Underwriting performance deteriorated, with the combined ratio surging to 187% in 2024 from 102% in 2023, driven by higher reserves in its long-tail credit insurance business. 

This led to a net loss of IDR73b in 2024, compared to a net profit of IDR8b in the previous year. Return on equity fell sharply to -17% from 2%, averaging -4% over the last three years. 

Fitch expects continued financial volatility due to Asei’s exposure to general insurance and reserve fluctuations in credit insurance.  

Gross premiums declined by 21% in 2024, following a 41% drop in 2023, mainly due to the company ceasing to receive multipurpose credit insurance business from its key client in early 2024. 

This reduced credit insurance’s contribution to gross premium written to 6% in 2024 from 54% in 2023. 

Meanwhile, Asei expanded its general insurance segment, particularly in property insurance, which now accounts for 67% of total premiums, up from 29% in 2023.