PT Asuransi Tugu Pratama Indonesia (TUGU) is expected to maintain strong capital strength over the medium term, supported by its solid risk-adjusted capitalization. This assessment is based on the company’s Capital Adequacy Ratio (BCAR), as measured by AM Best, which indicates a robust financial position.
AM Best also assessed TUGU’s investment portfolio as moderate risk, noting its diversification. The bulk of TUGU’s investments are allocated to bonds and time deposits, with smaller portions invested in real estate and equity holdings. Despite this diversification, an area of concern is the company’s reliance on reinsurance to cover large commercial risks, particularly in the fire, aviation, and energy sectors. Reinsurance also helps manage exposure to severe catastrophes.
While the majority of TUGU’s reinsurance assets are of high credit quality, the company still has some exposure to reinsurance providers that lack an international financial strength rating.
In terms of operational performance, AM Best has described TUGU’s performance as strong. The company posted a profit after tax of $91.1 million in 2023, a 229.5% increase from the previous year, primarily driven by a one-time gain from the resolution of a longstanding litigation case. Looking ahead, TUGU expects its underwriting performance for 2024 to improve, aided by ongoing portfolio adjustments. However, the company’s technical earnings may continue to be volatile in the near term, as has been the case in recent periods.
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