The National Reinsurance Corporation of the Philippines (Nat Re) has stated that it is looking forward to new gains in 2022, on the back of better economic prospects at home, brought about by relaxed pandemic restrictions, and a more robust life reinsurance segment.
“We are optimistic of recapturing gains in light of the improving economic environment, while remaining mindful of ever-present natural disaster threats and geo-political risks at home and abroad,” said Allan R. Santos, Nat Re President and Chief Executive Officer.
In a press release, it notes that following a robust 7.7% growth in Q4 21, the Philippine economy grew by 8.3% in Q1 22, with the main contributors to this increase being manufacturing, wholesale and retail trade, repair of motor vehicles and motorcycles, and transportation and storage, according to the Philippine Statistics Authority.
However, this came amid the various local and international headwinds, notably Typhoon Odette in December 2021, and the Ukraine-Russia war beginning in early 2022, with the latter negatively impacting inflation worldwide.
Santos, added: “We have been providing claims processing support and guidance to our cedants affected by the typhoon. We also have reduced and continue to underweight our investments in equities while taking advantage of the increase in yields of fixed income securities, factoring in inflation in pricing and managing insurance coverages.”
Furthermore, rating agency AM Best, recently forecasted Nat Re’s underwriting in 2022 to be backed by a more streamlined portfolio and the company’s domestic life reinsurance segment.
“AM Best expects the company’s prospective underwriting performance to be supported by ongoing portfolio remediation measures, including reduced participation or exiting from loss-making non-life treaties, as well as business growth in the more profitable domestic life reinsurance segment,” AM Best said in a press release.
In June 2022, AM Best affirmed Nat Re’s B++ (Good) Financial Strength Rating and bbb Long-Term Issuer Credit Rating, with an outlook of stable.
AM Best said: “The ratings reflect Nat Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.”
Moreover, in addition to expected growth in their life and health reinsurance businesses amid heightened awareness on the need for life and health insurance), Nat Re also expects to participate in the Philippine Catastrophe Insurance Facility (PCIF) launch this year.
The PCIF aims to increase Philippine financial resilience toward natural disasters to hasten the recovery of communities after a large loss event. At the same time, the PCIF also aims to address the catastrophe insurance gap and create a more risk-appropriate rating environment to ensure sustainable catastrophe premium rates, among other goals.
Through the PCIF, Nat Re helped initiate a review of the minimum tariffs for earthquake and typhoon risks, which have not been updated for more than a decade. The new schedule of minimum tariffs, which were set to improve the sustainability of catastrophe insurance, will soon be implemented in 2022.
