A.M. Best Affirms Ratings of Malayan Insurance Company Inc.

OLDWICK, NEW JERSEY -- A.M. Best Co. has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of "bbb" of Malayan Insurance Company Inc. (MICO) (Philippines). The outlook for both ratings is stable.

The ratings reflect the company's well established market presence, improvement in risk-adjusted capitalization and favorable underwriting income in 2005.

MICO has maintained its market leader position in terms of gross premiums written (GPW) in the Philippines' non-life insurance market over the last 36 years. The company's GPW generated from the domestic market increased by 9% in 2005. MICO has also established its market presence in the foreign markets. GPW generated from the foreign markets accounted for 18% in 2005 compared to 7% in 2002.

MICO's capitalization improved in 2005 as demonstrated by an increase in its Best's Capital Adequacy Ratio (BCAR), which measures capitalization on a risk-adjusted basis. Although the company restated its capital and surplus as at year-end 2004 from PHP 4.1 billion (USD 75 million) to PHP 2.9 billion (USD 53 million) in 2005 due to the adoption of the International Accounting Standards, wherein equity investments are carried at cost, the restatement did not materially affect MICO's risk-based capitalization. The BCAR for 2004 after the restatement remained at a similar level, which showed that the company was still strongly capitalized.

MICO posted an underwriting profit of PHP 60 million (USD 1 million) in 2005. It was the first time that MICO recorded a positive underwriting income since 2001. This improvement was attributed to a better claims experience and an improvement in the expense ratio.

Offsetting factors include relatively high country risk and intense market competition in the Philippines.

Given the political instability in the Philippines and high catastrophe exposures, the risk profiles of non-life insurers in the Philippines remain relatively high.

The minimum solvency requirement for insurance companies will be strengthening as proposed by the Insurance Commissioner of the Philippines. A.M. Best anticipates that there will be more merger and acquisition activities, and the size of the existing insurance companies will become larger in the Philippines.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.