MNRB

Financial Results …

Reinsurer MNRB Holdings Bhd was knocked by higher claims that could not be offset by a lower investment income in its second quarter.

The group reported a net loss of RM13.3mil in its quarter ended Sept 30 2008, compared with a net profit of RM25.4mil in the previous corresponding quarter.

MNRB experienced a combined claims ratio of 102.5% in the quarter as against a ratio of 92.9% previously. That stemmed from large reinsurance claims for damages to local properties from fire and natural disasters overseas. There was, in particular, a Slovenian hail storm in August 2008.

While there were more natural disasters that involved MNRB earlier in the year, “there is a time lag between the event and claims”. Hence, some provisions had to be made in the quarter even though some of the disasters, like the earthquake in Sichuan, China, had occurred in January 2008

Malaysian Reinsurance Bhd (Malaysian Re), the group’s biggest subsidiary, reported a lower investment income of RM24.8mil for the first half of the current financial year compared with RM33.3mil in the corresponding period last year.

Its net profit amounted to RM10.5mil in the period against RM45.3mil previously.
Labuan Reinsurance (L) Ltd, in which MNRB has a stake of 20%, showed a loss of RM10.6mil in the group’s half-year results.

Going Forward …

MNRB, an investment holding company, has exposure to overseas risks through Malaysian Re and Labuan Reinsurance.

As MNRB would some day lose its captive cessions of business from local insurers, it decided to venture cautiously overseas so as to maintain its level of revenue. Presently (Nov 2008), the domestic captive cessions account for about 50% of MNRB’s total revenue.

The cession contracts with local insurers end in 2010 and it is uncertain if that will be renewed as Bank Negara had said the mandatory reinsurance from local insurers with Malaysian Re would eventually be liberablised.