Asuransi Sinar Mas maintains satisfactory capital for expansion

The non-life insurer accounts for 9% of the total market share in GWP in 2023.

Indonesia-based Asuransi Sinar Mas’ (ASM) capital buffer should remain satisfactory to bolster its business expansion. Its investment portfolio is prudently managed and predominantly composed of cash equivalents, fixed-income securities, and mutual funds, according to Fitch Ratings.

“Capital adequacy, measured by the regulatory risk-based capital (RBC) ratio, was 335% at end-2023 (2022: 330%), while ASJ's RBC was 931% (2022: 795%), well above the 120% minimum regulatory requirement. Capital quality is sound, as it consists of ordinary capital and is underpinned by continued surplus growth,” Fitch Ratings said.

Fitch Ratings Indonesia also perceived the insurer to have a stable outlook, indicating a very strong capacity to meet policyholder obligations compared to peers in Indonesia.

Key factors supporting this rating include ASM's favourable business profile as a leading non-life insurer with a 9% market share in gross written premium (GWP) in 2023. 

The company benefits from robust branding, diverse distribution channels, and solid infrastructure. ASM operates as a composite insurer, with its life insurance subsidiary contributing significantly to its portfolio.

ASM demonstrated improved profitability despite a slight decline in consolidated premiums, achieving a return on equity of 13% in 2023. This was driven by better non-life underwriting performance and reduced life insurance claims, reflected in a lower combined ratio of 94%.

Whilst ASM faces challenges in its reinsurance arrangements amid deteriorating credit quality amongst some domestic reinsurers, its overall risk exposure remains manageable with a capital base sufficient to support its operations and expansion plans.