PT Asuransi Tokio Marine Indonesia (TMI) is expected to maintain its strongest level of risk-adjusted capitalisation over the medium term, supported by steady earnings generation and a prudent investment strategy, despite facing challenges linked to reinsurance exposure, according to AM Best.
The global credit rating agency said the insurer continues to demonstrate strong balance sheet strength, with capital adequacy remaining at the highest level under Best’s Capital Adequacy Ratio (BCAR) model as of the end of 2025. The assessment reflects TMI’s solid financial foundation and its ability to withstand potential market and underwriting pressures.
A key driver of the company’s financial strength has been its ability to generate capital internally. Shareholders’ equity increased by 21% in 2025 after the insurer retained all of its earnings for the year rather than distributing profits. The move strengthened the company’s capital base and enhanced its capacity to absorb unexpected losses while supporting future growth.
AM Best expects TMI’s capital position to remain stable in the coming years, citing its consistent profitability and disciplined financial management. The insurer has maintained a track record of generating earnings that contribute directly to capital growth, reducing reliance on external funding sources.
The company’s conservative investment approach has also played an important role in preserving financial stability. TMI’s portfolio is largely concentrated in government bonds, cash and bank deposits, assets typically regarded as low risk and highly liquid. Such a strategy helps protect the insurer from significant market fluctuations whilst ensuring sufficient liquidity to meet policyholder obligations.
Despite these strengths, AM Best noted that TMI’s balance sheet assessment is constrained by its moderate dependence on reinsurance. Reinsurance enables insurers to transfer a portion of their risks to other companies, helping them manage exposure to large claims and catastrophic events. However, such arrangements can create counterparty risk if reinsurance partners are unable to meet their financial commitments.
The rating agency highlighted elevated counterparty credit risk stemming from TMI’s exposure to domestic insurance and reinsurance companies that do not carry internationally recognised financial strength ratings. Whilst these entities remain important participants in Indonesia’s insurance market, the lack of international ratings can make independent assessments of their financial resilience more difficult.
AM Best also expects TMI’s operating performance to remain strong, supported by favourable underwriting results and stable earnings. The insurer has benefited from relatively low claims experience across its major business segments, helping to sustain profitability.
Based on AM Best’s calculations, TMI reported a combined ratio of 84% in 2025. In insurance terms, a ratio below 100% indicates that premium income exceeds claims and operating expenses, reflecting profitable underwriting performance. The result points to disciplined risk selection and effective management of claims costs across the company’s portfolio.
Alongside underwriting profits, investment income is expected to continue contributing positively to earnings. Returns generated from interest-bearing assets, particularly government securities and deposits, provide a dependable source of revenue and help support overall financial performance.
AM Best described TMI’s business profile as limited, reflecting its relatively small presence in Indonesia’s non-life insurance market. The company accounted for around 2% of gross premiums written in 2025, placing it among the smaller players in a highly competitive industry.
Despite its modest market share, TMI benefits from a reasonably diversified portfolio across fire, marine and motor insurance lines. This diversification helps reduce concentration risk and provides a broader base of revenue across different areas of business.
The insurer also continues to benefit from its affiliation with Tokio Marine Holdings, one of Japan’s largest insurance groups. Through this connection, TMI gains access to business associated with Japanese companies operating in Indonesia, particularly firms involved in trade, manufacturing and investment activities. This relationship provides a valuable source of premium growth and strengthens the company’s competitive position.
AM Best’s assessment indicates that while reinsurance-related counterparty risks remain an area of attention, TMI’s strong capitalisation, conservative investment strategy and consistent profitability leave it well positioned to maintain financial resilience. Backed by prudent management and support from its parent group, the insurer is expected to sustain its financial strength and stable operating performance in the years ahead.