[RAM] RAM Ratings assigns insurer financial strength ratings of AAA/P1 to Great Eastern Life Malaysia

RAM Ratings has assigned insurer financial strength ratings of AAA/Stable/P1 to Great Eastern Life Assurance (Malaysia) Berhad (GELM or the Insurer). At the same time, RAM has assigned a rating of AA₁/Stable to GELM’s proposed RM1 billion Tier-2 Subordinated Notes Programme. The issue rating is rated one-notch below GELM’s insurer financial strength, reflecting the bonds’ status as unsecured and subordinated obligations of the Insurer.

GELM is a fully owned and core subsidiary of Great Eastern Holdings Limited (the Group), serving as its conventional life insurance subsidiary in Malaysia; in FY Dec 2024, it contributed more than 40% to the Group’s pre-tax profit. While we view the likelihood of extraordinary parental support as “very high”, no rating uplift has been applied, as its stand-alone credit profile is already strong. 

With a dominant 23.9% market share (based on weighted new sales) in 2024, GELM is the largest player in the conventional life insurance industry. Its competitive position is backed by its established franchise, an extensive distribution network of over 19,000 agents and a bancassurance partnership with OCBC Bank (Malaysia) Berhad. 

GELM’s large in-force base of 3.5 mil policies generates a steady stream of recurring premiums and scale efficiencies. Underwriting profits have consistently been the main source of pre-tax earnings, making up over 75% of the total in both 2023 and 2024. This is supplemented by investment income, the returns on which may fluctuate according to market conditions. Over the 2022-2024 period, the Insurer’s pre-tax return on assets averaged 1.8%. 

With a capital adequacy ratio generally in the 190-200% range, GELM is well-capitalised. Proceeds from the bond issuance will be used to support its gradual diversification into new products that may be more capital-intensive. GELM’s high policyholder retention, one of the indicators of underwriting quality, also supports its financial strength. This indicator was above 90% in 2024. 

On balance, GELM’s relatively high equity holdings (end-December 2024: around 30% of total investments) exposes its investment performance to market swings. This risk though, is partially mitigated as a larger proportion of equities is held in the participating and investment-linked funds where risk and returns are shared with policyholders.

As a large medical insurer, GELM is also sensitive to regulatory changes, particularly as rising medical premiums heighten affordability concerns in Malaysia. In late 2024, Bank Negara Malaysia announced repricing measures including a 10% annual cap on medical insurance premium hikes from 2024 to 2026. GELM’s subsequent recognition of a one-time adjustment drove a 4.4% decline in its contractual service margin last year. The industry and stakeholders are taking steps to address medical cost and affordability issues, though meaningful change will take time. 


Analytical contacts
Amy Lo 
(603) 2708 8289
amy@ram.com.my

Sean Lim, CFA 
(603) 2708 8253
sean@ram.com.my

Media contact
Sakinah Ariffin
(603) 2708 8212
sakinah@ram.com.my