Fitch affirms MAIPARK at IFS BBB+

IQPlus - Fitch Ratings has affirmed Indonesia-based PT Asuransi MAIPARK Indonesia's (MAIPARK) National Insurer Financial Strength (IFS) Rating at 'BBB+(idn)'. The Outlook is Stable.

'BBB' National IFS Ratings denote an adequate capacity to meet policyholder obligations relative to all other obligations or issuers in the same country, across all industries and obligation types. However, changes in circumstances or economic conditions are more likely to affect the capacity for payment of policyholder obligations than for financial commitments denoted by a higher rated category.

The rating reflects MAIPARK's sound operating profitability, prudent investment management and strong risk-based capitalisation. It also takes into account the company's business concentration in reinsuring earthquake risks in the catastrophe-prone Indonesian market.

MAIPARK's total gross premiums (including pending policies) grew by 16.99% to IDR105.2bn at end-September 2013 from IDR89.9bn at end-September 2012. This is in line with the growth of the Indonesian insurance market in general.

Effective January 2014, the regulator will require all general insurers and reinsurers in Indonesia to cede their earthquake risks to MAIPARK in the amount of 15% of the Total Sum Insured (TSI) with a maximum of USD3.5m on any one risk for all location in Indonesia. This is in contrast to the existing mandatory cession of between 5% and 25% of TSI with maximum of USD2.5m on any one risk.

Following the change, MAIPARK's risk exposure will likely increase, and the company's management has indicated that it will restructure its Excess of Loss (XOL) retrocession protection for 2014 based on the updated catastrophe modelling results.

MAIPARK's investment portfolio has remained highly liquid and conservative as cash and deposits accounted for more than 90% of its invested assets as of end-September 2013.

The Stable Outlook reflects Fitch's expectation that MAIPARK will continue to maintain sufficient capital buffer to support its ongoing business growth and shield itself from potential shocks. MAIPARK's risk-based capitalisation (RBC) ratio amounted to a strong 1080% at end-September 2013, much higher than the regulatory minimum of 120%.