By James A. Loyola The National Reinsurance Corporation of the Philippines (NRCP) was assigned a financial strength rating of PRS A by the Philippine Rating Services Corporation (PhilRatings) as its profitability continues to be volatile. A PRS A rating means that an insurer has strong financial security characteristics, but is somewhat more likely to be affected by adverse business conditions compared to higher-rated insurance companies. NRCP, the Philippines’ sole domestic professional reinsurer, was given a PRS A rating also in light of its solid market franchise; shareholders of good standing; experienced management; sound investment portfolio; and the expectations of continued industry growth. As the only domestic professional reinsurance firm in the country, NRCP has a solid market franchise. As granted by the law, NRCP is entitled to take up a maximum 10 percent share of all the reinsurance business ceded abroad. This gives NRCP unparalleled access to domestic reinsurers’ business, and also a broader view of their reinsurance requirements. The company’s marketing strategy is supported by its technical know-how, industry track record and familiarity with the domestic market. However, PhilRatings noted that, “while NRCP holds a lot of unique opportunities as the sole domestic professional reinsurance firm, PhilRatings notes that its profitability continues to be volatile.” IT added that, “operating results were weak for the historical period 2011 to 2015, although underwriting profit margin and returns have improved beginning 2014. In the last three years, however, net profit had a declining trend.” “While investment yields have been consistently positive, inconstant growth across business lines and higher than expected loss and expense ratios negatively impacted operating performance results,” PhilRatings said.