RAM Ratings reaffirms MNRB’s and Malaysian Re’s ratings

Published on 08 Feb 2021.

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RAM Ratings has reaffirmed MNRB Holdings Berhad’s (MNRB or the Group) and Malaysian Reinsurance Berhad’s (Malaysian Re or the Reinsurer) ratings, as outlined in Table 1. The one-notch difference between MNRB’s senior debt issue rating and Malaysian Re’s AA2 long-term insurer financial strength rating reflects the former’s structural subordination as a non-operating holding company and its moderate debt load at the holding-company level.

Our rating action reflects MNRB’s dominant position in the domestic general reinsurance industry, where its primary subsidiary – Malaysian Re – had retained a significant share (66%) of the industry’s gross reinsurance premiums in 2019. Its well-established franchise in the domestic market is supported by regulatory voluntary cession (VC) arrangements and the Reinsurer’s long-standing relationships with local cedants. The ratings also consider the Group’s subsidiaries’ healthy capitalisation and strong reserves coverage, although its volatile underwriting performance counterbalances these strengths.

MNRB’s credit profile hinges on Malaysian Re’s given that the latter is the largest contributor to the Group’s earnings. Apart from reinsurance, the Group also participates in the domestic general takaful and family takaful segments through subsidiaries Takaful Ikhlas General Berhad (IKHLAS General) and Takaful Ikhlas Family Berhad (IKHLAS Family) although these businesses are relatively small in terms of their earnings contribution to MNRB, as well as in their respective takaful segments. IKHLAS General has a 10.0% share of the general takaful segment’s gross contributions while IKHLAS Family contributed just 4.5% of the family takaful segment’s annual contribution equivalent in 2019.

Malaysian Re drove much of the Group’s earnings improvements in FY Mar 2020 and 1H FY Mar 2021, as the latter’s pre-tax profits soared to a respective RM150.9 mil and RM105.2 mil (fiscal 2019: RM119.4 mil; 1H fiscal 2020: RM99.1 mil) following a rebound in growth in the Reinsurer’s overseas portfolio. While Malaysian Re does not expect a substantial increase in claims arising from the pandemic due to limitations on claims for infectious and contagious diseases (ICD), the Reinsurer had nonetheless made a conservative assessment and set aside RM18.9 mil for potential Covid-19 related claims in 1H fiscal 2021. 

The capital adequacy ratios of the Group’s main subsidiaries remained comfortably above their individual target capital levels and the regulatory minimum of 130% as at end-September 2020. At the company level, MNRB’s gearing and double leverage ratios remained well within their rating thresholds at a respective of 0.3 time and 1.1 times as at end-September 2020 (end-March 2019: 0.3 time and 1.3 times). 

Table 1: Ratings of MNRB and Malaysian Re

MNRB Holdings Berhad

  1. RM320 million Sukuk Murabahah Programme (2019/-)
  • Senior sukuk
  • Subordinated sukuk




Malaysian Reinsurance Berhad

  1. Insurer Financial Strength Ratings
  2. RM250 million Subordinated Medium-Term Note Programme (2015/2030)





Analytical contact
Loh Kit Yoong
(603) 3385 2493

Media contact
Padthma Subbiah
(603) 3385 2577

The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2021 by RAM Rating Services Berhad



Rating Rationale: MNRB Holdings Berhad

Rating Rationale: Malaysian Reinsurance Berhad

Ratings on MNRB Holdings Berhad