The National Reinsurance Corporation of the Philippines (Nat Re), the Philippines’ sole professional reinsurer, was assigned a financial strength rating of PRS A, with a Stable Outlook, by the Philippine Rating Services Corporation (PhilRatings).
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.
PhilRatings said the assigned financial strength rating and Outlook take into consideration Nat Re’s solid market franchise, shareholders of good standing, experienced management, and sound investment portfolio.
As the only domestic professional reinsurance firm in the country, Nat Re is considered to have a solid market franchise.
Nat Re has a unique advantage granted by the law, which is that of being entitled to take up a minimum 10 percent share of all the outward reinsurance business of domestic insurance companies, and which would otherwise be ceded abroad.
This gives Nat Re significant access to domestic reinsurers’ business, and also a broader view of their reinsurance requirements.
As of end-March 2021, the Government Service Insurance System (GSIS) remained as Nat Re’s largest shareholder, with a 25.7 percent ownership stake in the Company.
The Bank of the Philippine Islands (BPI) and MICO Equities, Inc. (MEI) were the Company’s other major shareholders, with ownership interests of 13.7% and 12.9 percent, respectively.
MEI is a holding company for the Yuchengco Group’s non-life insurance business, Malayan Insurance Company Inc., which was the largest domestic non-life insurance company in terms of Gross Premiums Written, as of end-2020.
As of end-2020, low-risk fixed income securities made up 84.9 percent of Nat Re’s total investment portfolio. Equity securities, on the other hand, accounted for 14.7 percent of the total portfolio, lower than its share in 2019 (17.7 percent) and 2018 (27.2 percent).
Nat Re’s equity investment placements were largely in blue chip companies belonging to various industries, and in unlisted companies that have been approved by the Investment Committee.