RPT-Fitch: Avrist Assurance IFS ratings affirmed at 'AA-(idn)', outlook stable

Wed Mar 12, 2014 5:37am EDT

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March 12 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has affirmed the ratings National Insurer Financial Strength (IFS) PT Avrist Assurance (Avrist) in 'AA-(idn)'. The prospect is Stable.

National IFS rating 'AA' indicates a very strong capacity for meet obligations to policyholders relative to all liabilities other or other issuers in Indonesia, regardless of industry and type of liability. The risk of cessation or interruption of payments just different less than the bond or the issuer with the highest ranking in the country.

LEVEL FACTORS MOVER

The rating takes into account the financial fundamentals Avrist healthy consistent with stable operating performance, investment mix conservative and strong capitalization levels. The rating also consider the challenge to improve the sustainability portfolio Avrist business and strengthen its position in a competitive market.

Stable Outlook reflects Fitch's expectation that it will maintain Avrist financial fundamentals and healthy capital buffers relative to profile operations.

Avrist has nearly four decades of operational experience in the insurance market Indonesia, with approximately 1.1% of the total gross premium market in late 2013. Is the largest insurance company Avrist 10th by total assets at industry with more than 40 players.

otal gross premiums at the end of 2013 reached Rp1.276, 6 billion based on unconsolidated financial statements are not audited. It is decrease of approximately 5.13% than the previous year and largely due to by the company's focus on premium than regular and traditional products of single berpremi products and unit-linked products. The latter is seen less popular and more likely to be melted (redeemed) at the time of competition intensified market and liquidity crises.

Nonetheless, the company remains healthy bottomline profitability with earnings net grows 18.3% to IDR419, 7BN in late 2013 of IDR354, 8bn in end of 2012. This is mainly due to Realized investment gains and efficient cost management.

Avrist investment portfolio has not shown a significant change in the profile risk. Equity investment remains minimal, about 1.5% of total assets invested at the end of 2013. The ratio of risk-based capitalization (RBC) remains Strong - increased to 814% at the end of 2013 from 671% at the end of 2012.

SENSITIVITY RATINGS

The main drivers for the rating actions of which include strengthening positive sustained in Avrist credit profile that can be reflected in the business franchise improved and increased market recognition. The upgrade can also be given if the premiums can continue to improve sustainability, with the success of product diversification over the traditional life protection products, and also improved operating performance with pre-tax return on assets consistently above 3.5% (end of 2013: 4.5%).

The main drivers for the rating actions include a weaker negative capitalization significantly in connection with a business profile with RBC ratio consistently below 300% and a decrease in the ratio of business performance persistence for the first-year premium down 80% in the long term.

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