PhilRatings gives PRS A grade to Nat Re

THE National Reinsurance Corporation of the Philippines (Nat Re) obtained a PRS A financial strength rating with a “stable” outlook from local debt watcher Philippine Rating Services Corp. (PhilRatings).

The country’s sole local reinsurer said in a press release that its latest rating indicates the company’s “strong financial security” while a “stable” outlook meant this may be maintained in the next 12 months.

It said PhilRatings took into account the company’s “solid market franchise, shareholders of good standing, experienced management and sound investment portfolio” for its assessment.

Nat Re, however, remains more vulnerable to potential adverse business conditions compared to other insurance companies with a higher rating, PhilRatings said.

Aside from being the only reinsurer in the country, Net Re also has an advantage granted by the law where it can take up at least 10% of all outward reinsurance business of local insurance companies.

“This gives Nat Re significant 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 mark,” it said.

State-owned Government Service Insurance System (GSIS) is its biggest shareholder with a 25.7% stake in the firm.

Other major shareholders of Nat Re includes the Bank of the Philippine Islands (BPI) and MICO Equities, Inc. (MEI) with 13.7% and 12.9%, respectively.

The national reinsurer saw its net profit drop by 24% to P120 million in 2020 from P157 million in 2019 due to lower investment income. — BML