The ratings reflect Energas’ strong risk-adjusted capitalization, excellent earnings track record and the position it holds as a key part of Petronas’ risk management framework.

Energas continues to register a strong underwriting margin, which is supported by a scalable operating model and a favorable claims experience. That claims experience has remained favorable due to the company’s comprehensive reinsurance program, and to a decline in claims severity and frequency as a result of lower activities in upstream projects.

An offsetting rating factor is a smaller written premium base, as Petronas scales back on capital expenditures. Nonetheless, A.M. Best expects Energas’ low level of fixed operating expenses to help maintain favorable expense ratios, as business volumes decrease with the parent’s business cycle.

Positive rating actions are unlikely in the near term. Negative rating actions may arise from material deterioration of Energas’ risk-adjusted capitalization if there is repatriation of capital.

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