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AM Best Assigns Credit Ratings to Mongolian National Reinsurance JSC

AM Best has assigned the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” (Fair) to Mongolian National Reinsurance JSC (Mongolian Re) (Mongolia). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Mongolian Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

Incorporated in 2014, Mongolian Re was established under its original name of Agriculture Reinsurance JSC as a wholly owned company of the Ministry of Finance of Mongolia (MoF). Mongolia Re is domiciled in Mongolia, where 13% of the country’s gross domestic product is generated from an agriculture sector that is dominated by livestock, according to the World Bank. The company acts as the sole operator of the index-based livestock insurance (IBLI) pool, supporting social stability by providing nationwide insurance coverage to livestock and safeguarding herder households’ welfare.

Mongolian Re broadened its business scope in 2018 to include additional reinsurance lines of business such as property, motor, aviation, liability and personal accident. In 2022, Mongolian Re’s gross written premium (GWP) was MNT 4.0 billion (USD 1.5 million). The company has maintained a leading market position in the livestock and motor reinsurance segments.

Mongolian Re’s very strong level of balance sheet strength is underpinned by its risk-adjusted capitalization being assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s adjusted capital and surplus has been on an upward trend for the past five years, with a compound annual growth rate of 4.3%.

The company has appropriate retrocession coverage for its catastrophe-exposed lines, ceded to reinsurers with sound credit quality. This protects the company’s capital position from material negative impacts from extreme weather events. Notwithstanding, a partially offsetting factor to the company’s balance sheet strength assessment is its small capital size.

AM Best considers Mongolian Re’s operating performance as adequate. The company reported a robust compound annual growth rate increase in gross written premium of 25.2% from 2017 to 2022 and delivered an average return-on-equity (ROE) of 7% over the same five-year period, mainly attributed to its robust and stable investment income from time deposits. The five-year average net investment yield was 11.2%. Conversely, Mongolian Re’s underwriting performance has been unfavourable, attributed to its volatile loss ratio from catastrophe losses and high management expense ratio due to its limited portfolio sizes. The company projects that they would gradually manage down the expense ratio from expanding its premium scale and improve its operating efficiency over the short to intermediate term.

Given Mongolian Re’s vital role in its domestic insurance market, AM Best views the company’s business profile as limited, compared with international non-life reinsurance peers. Other offsetting factors in the business profile assessment include Mongolian Re’s concentration in its domestic market, as well as in products with high natural catastrophe risks.

The company’s ERM is assessed as appropriate. Mongolian Re has a defined risk appetite statement and periodically monitors key risk indicators to govern its key risks. The company performs catastrophe modelling on livestock mortality, and submits its risk report and solvency report to the local insurance regulator, the Financial Regulatory Commission, on a regular basis.

The stable outlooks reflect AM Best’s expectation that Mongolian Re’s balance sheet strength will remain at a very strong level through profit accumulation.

Positive rating actions could occur if the company demonstrates consistent improvement in underwriting performance and sustains a decrease in its expense ratio, while maintaining robustly high investment returns.

Negative rating actions could occur if the company’s risk-adjusted capitalization significantly erodes by factors such as escalating underwriting or investment risk, excessive dividends, or sustained operating losses.

Negative rating actions could also occur if the company fails to execute appropriate ERM control, for example, experiencing unexpected changes in business and investment strategies subject to undue influence from its shareholders that lead to a materially negative impact to its credit fundamentals.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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