Fitch has chosen to withdraw the ratings on POI for commercial reasons.
KEY RATING DRIVERS
The rating affirmation reflects POI's 'Strong' capitalisation and financial performance. The rating also incorporates its 'Less Favourable' business profile and the challenges it faces in managing potential volatility in its underwriting performance due to its focus on the motor insurance business.
POI maintained a regulatory capital ratio of above 200% at the financial year ended September 2020 (FY20) and at end-March 2021, well above the 130% regulatory minimum. The combined ratio reached 107% for FY20, with a three-year average ratio of 98%. For 1HFY21, the combined ratio was 110%. POI's business profile is 'Less Favourable' compared with that of all other Malaysian non-life insurance companies, due to its smaller operating scale and limited business diversification within the broader local non-life market as it focuses on the motor business.
RATING SENSITIVITIES
Rating sensitivities are not applicable as the rating has been withdrawn.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
Following the withdrawal of the rating for POI, Fitch will no longer be providing the associated ESG Relevance Scores.
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