AM Best has affirmed the financial strength rating of B++ (Good), the long-term issuer credit rating of “bbb” (Good), and the Philippines National Scale Rating of aa+.PH (Superior) for National Reinsurance Corporation of the Philippines (Nat Re). The outlook for all ratings is stable.
The ratings reflect Nat Re’s balance sheet strength, which AM Best assesses as strong, along with adequate operating performance, a neutral business profile, and appropriate enterprise risk management.
Nat Re’s financial flexibility is supported by a portfolio with moderate risk, with most assets allocated to fixed-income securities issued by the Philippine government. The balance sheet remains sensitive to large natural catastrophe events, but this risk is partially offset by the company’s retrocession program.
AM Best considers Nat Re’s operating performance to be adequate, with a five-year average return-on-equity ratio of 4.8% from 2020 to 2024. Underwriting performance has improved in recent years due to a better expense ratio, resulting from lower net acquisition costs and management expenses relative to earned premiums.
In 2024, the loss ratio was negatively affected by an increase in experience refunds to cedents, which resulted from better-than-expected loss experience, as well as unfavorable prior-year claims development in the life portfolio.
Prospective underwriting performance is expected to benefit from portfolio remediation in the non-life reinsurance segment and business growth in the profitable life reinsurance segment and other specialty lines.
Earlier this year, Nat Re was also added to the Philippine Stock Exchange (PSE) Financials Index, reflecting the growing role of reinsurers in the local market and increased investor interest in the sector.
Philippine insurers have faced higher reinsurance costs in 2025, with local companies experiencing increased premiums and tighter terms as global reinsurers adjust pricing and capacity in response to catastrophe risk and inflation. In response, insurers are reassessing risk retention strategies and seeking more efficient capital management solutions.
The Insurance Commission reported that total invested assets in the Philippine insurance sector reached ₱2.26 trillion as of June 2025, with net income for the industry growing to ₱28.78 billion. This financial growth comes as the sector continues to adapt to evolving market conditions and regulatory changes.
What are your thoughts on this story? Please feel free to share your comments below.
