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AM Best Affirms Credit Ratings of PGA Sompo Insurance Corporation

August 26, 2021 GMT


AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of PGA Sompo Insurance Corporation (PGA Sompo) (Philippines). The outlook of the Credit Ratings (ratings) is stable.

The ratings reflect PGA Sompo’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

PGA Sompo’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which remained at the strongest level at year end 2020. The company’s capital adequacy is supported by its very low net underwriting leverage and conservative investment portfolio. Other positive balance sheet considerations include the implicit and explicit support provided by the company’s minority interest shareholder, Sompo Japan Insurance Inc. (Sompo). A partially offsetting balance sheet factor is the company’s small absolute capital base, which AM Best views to increase the sensitivity of capital adequacy to changes in performance and stressed scenarios. As of Dec. 31, 2020, the company’s shareholder equity stood at PHP 1.3 billion (USD 26.8 million). In addition, PGA Sompo exhibits very high reinsurance usage and dependence, with over 95% of premiums ceded to reinsurers, albeit with the majority placed with its financially strong shareholder, Sompo.


AM Best assesses PGA Sompo’s operating performance as adequate. The company has evidenced a track record of sound operating profitability over the past five years with an average return on equity ratio of 6.3% (2016-2020). The company’s net loss ratio has exhibited some volatility over the past five years, although the impact on overall earnings is limited by the company’s very low premium retention ratio. Underwriting results over this period were driven by reinsurance commission income generated on ceded business, with higher commissions in recent years having supported improved results. Investment income has remained a positive contributor to operating profits, with a five-year average net investment yield of 2.3% (2016-2020). Prospectively, AM Best expects underwriting performance to contribute positively to operating results, but remain volatile due to the company’s small net premium base. Investment results are anticipated to be a more stable component of overall earnings over the medium term.


AM Best views PGA Sompo’s business profile as limited. Despite the company benefiting from its affiliation with Sompo, which supports strong access to Japan-related risks in the Philippines, PGA Sompo is considered a small non-life insurer. Based on gross written premium, the company had a domestic market share of approximately 3% in 2020. As the company’s business model sees it cede out almost all of its risks, its net premium base accounts for a small component of market-wide retained premium in the Philippines. In addition, the company’s underwriting portfolio is considered concentrated by line of business and geography.

AM Best considers the company’s ERM approach as appropriate given the size and complexity of its current operations. PGA Sompo also is viewed to benefit from a level of risk management oversight and support from the Sompo group.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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CONTACT: Susan Tan

Financial Analyst

+65 6303 5023

susan.tan@ambest.comYuan Tian

Senior Financial Analyst

+65 6303 5016

yuan.tian@ambest.comChristopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.comJim Peavy

Director, Communications

+1 908 439 2200, ext. 5644




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PUB: 08/26/2021 09:52 AM/DISC: 08/26/2021 09:53 AM