EGIB balance sheet strength underpinned by risk-adjusted capitalisation

Its balance sheet strength achieved its ‘strongest’ level at year-end 2023.

Etiqa General Insurance Berhad (EGIB) (Malaysia) achieved its strongest balance sheet during the year-end 2023 underpinned by its risk-adjusted capitalisation, AM Best said.

According to the ratings firm, it views EGIB as having a moderate-risk investment strategy, which is made up of a combination of low-risk assets of cash, deposits and bonds, as well as higher-risk assets including equities and real estate. In addition, the company has a high dependence on reinsurance, with a net retention ratio of 34% in 2023. As a result, the company’s reinsurance recoverables are a large balance sheet item.

Moreover, EGIB’s operating performance is as strong, supported by favourable underwriting performance and stable investment income. Low net loss experience in the company’s core business lines of fire and personal accident, as well as favourable reinsurance commission income from ceded risks, has been the key driver of technical profitability over recent years.

In 2023, the company’s operating performance remains favourable, primarily due to better investment returns despite lower underwriting results. Although the ongoing phased liberalisation of motor and fire insurance pricing in Malaysia may constrain future underwriting margins, AM Best said it expects EGIB to maintain its strong operating performance over the medium term, underpinned by underwriting and pricing discipline.

EGIB was described as a midsized non-life insurer in Malaysia, with a market share of approximately 10%, based on 2023 gross written premium. The company’s underwriting portfolio is diversified moderately by line of business and distribution channel, albeit with the majority of business originating from Malaysia.

As part of the Maybank group, EGIB benefits from good distribution capabilities with preferential access to the business through its parent’s banking network. Competitive conditions in core business lines in Malaysia’s general insurance industry are expected to persist over the medium term.