Energas Insurance faces performance pressure amidst rising claims frequency

Its underwriting performance improved in the first nine months of 2024.

Energas Insurance (L) Limited (ENERGAS) in Malaysia is facing ongoing pressure on its operating performance, which has weakened due to increased claims frequency, AM Best said.

Whilst ENERGAS saw underwriting deterioration in recent years, its performance improved in the first nine months of 2024, supported by better loss experience and premium rate increases. 

However, AM Best noted that the effectiveness of the company’s remedial measures remains uncertain and subject to execution risk.

ENERGAS maintains a strong balance sheet, with its risk-adjusted capitalisation at the strongest level based on Best’s Capital Adequacy Ratio (BCAR). 

The insurer’s investment portfolio remains conservative, with most assets allocated to cash, deposits, and high-quality government and corporate bonds. 

Low net underwriting leverage has kept capital requirements manageable, although potential large losses across multiple policies could lead to balance sheet volatility. This risk is mitigated by reinsurance.  

AM Best assesses ENERGAS’ business profile as neutral. As a single-parent captive of Petroliam Nasional Berhad (PETRONAS), the company benefits from access to the group’s insurance risks. 

However, its underwriting portfolio remains concentrated in Malaysia’s upstream and downstream energy sectors. Despite these challenges, ENERGAS’ financial strength remains stable, with future performance dependent on the success of ongoing corrective measures.