MPM Insurance’s profits stable, bolstered by investment yields

The company's GPW grew by 23% in the first nine months of 2024.

PT Asuransi Mitra Pelindung Mustika's (MPM Insurance) profits are stable, according to Fitch Ratings. 

MPM Insurance's focus on motor and property insurance has bolstered its performance, contributing 30% and 43% of total gross premium written (GPW), respectively, as of September 2024. 

The company's GPW grew by 23% in the first nine months of 2024, recovering from a 4% decline in 2023, driven by reduced exposure to multipurpose credit insurance, now only 0.4% of GPW.

Profitability has remained steady despite an increase in the combined ratio to 98% in the same period, up from 96% in 2023, due to higher commission and operating expenses linked to business growth. 

Return on equity improved to 9% from 7% in 2023, supported by strong investment yields.

MPM Insurance's regulatory risk-based capital (RBC) ratio stood at 388% as of September 2024, well above the regulatory minimum and supported by reserve releases and higher admitted assets. 

However, the insurer's capital base remains relatively small compared to larger domestic players.

The company’s reliance on reinsurance recoverables, which represented 118% of its capital base at the end of September 2024, continues to pose challenges, particularly given the deteriorating credit quality of some domestic reinsurers. 

Fitch noted efforts to mitigate this risk through reduced reliance on these entities.

MPM Insurance maintains a conservative investment strategy, with liquid assets such as cash and fixed-income securities comprising around 80% of its portfolio between 2021 and 2023. This approach is expected to continue, ensuring stability amidst a diverse investment mix.