[RAM] RAM Ratings downgrades MCIS Life's insurer financial strength ratings to A2; revises outlook to stable

RAM Ratings has downgraded MCIS Insurance Berhad’s (MCIS Life or the Insurer) insurer financial strength (IFS) ratings to A₂/P1 from A₁/P1. The downgrade reflects a material weakening in MCIS Life's profitability in FY Dec 2024 and 1H FY Dec 2025, with underwriting and pre-tax losses in both periods. At the same time, business mix remains heavily skewed towards yearly renewable group products and single-premium savings plan. These issues, which underpinned the negative outlook in early 2025, continued to weigh on the Insurer’s performance throughout last year. Consequently, the deterioration in its credit profile no longer supports the previous A₁ long-term IFS rating.

MCIS Life’s underwriting performance deteriorated further, recording continued underwriting losses of RM10.0 mil in 1H FY Dec 2025 (FY Dec 2024: RM11.3 mil loss; FY Dec 2023: RM40 mil profit). The weakness was primarily due to higher expenses arising from regulatory overrun cost treatment and elevated medical claims. Pre-tax losses widened further to RM10.6 mil in 1H FY Dec 2025, compared with a modest RM0.5 mil loss in FY Dec 2024, which included a one-off RM11.9 mil impairment.

Single-premium savings policies and yearly renewable employee benefits (EB) plans accounted for over 80% of total new business in 1H FY Dec 2025 - well above the industry average and a key source of NB volatility. Management has initiated a turnaround plan focused on the mid-income segment, premium repricing and phasing out legacy loss-making offerings in favour of higher-margin products. However, successful execution of these initiatives – without eroding competitiveness or customer retention – remains uncertain.

The revision of the rating outlook to stable from negative reflects our view that MCIS Life’s conservative investment strategy and still-sound capitalisation provide sufficient buffers at the current A₂ long-term IFS rating. We expect underwriting performance to stabilise from FY Dec 2026, with management projecting a return to profitability.

While capital buffers experienced some erosion amid operational pressures in 2025, management targets maintaining a capital adequacy ratio of 210-215% this year (end-September 2025: 208%). Continued strategic and operational support from its 51% shareholder, Sanlam Limited – particularly in technical and operational domains – remains a key credit consideration. However, no uplift for extraordinary parental financial support has been incorporated into the ratings.

The rating for MCIS Life’s RM200 mil Tier 2 subordinated debt has likewise been downgraded to A₃, with the outlook on the rating revised to stable. The issue rating is rated one notch below MCIS Life’s long-term IFS rating, reflecting the unsecured and subordinated nature of the instrument.


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

Loh Kit Yoong
(603) 2708 8285
kityoong@ram.com.my

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my