business

TUGU Maintains Global Rating Of A- From AM Best For 9 Years, Here’s Its Outlook For 2025

PT Asuransi Tugu Pratama Indonesia Tbk (Tugu Insurance/TUGU) has once again received recognition for its performance from the international rating agency AM Best, achieving an A- rating at the beginning of 2025. This marks the ninth consecutive year that the company has earned this acknowledgment. TUGU's expansion into the retail segment has also been highlighted in the report and by analysts.

In the latest report released on January 24, 2025, TUGU maintained its Financial Strength Rating (FSR) at A- (Excellent) and its Long-Term Issuer Credit Rating (Long-Term ICR) at “a-” (Excellent). Additionally, TUGU achieved the highest Indonesia National Scale Rating (NSR) of aaa.ID (Exceptional) at the national level.

AM Best pointed out several key factors supporting TUGU's strength. One major factor is its very strong financial balance sheet, backed by risk-adjusted capitalization that remains at the highest level. With a diversified investment portfolio, primarily in bonds and deposits, TUGU is seen as capable of maintaining its financial stability.

In terms of operational performance, TUGU has shown impressive results. In 2023, net profit surged to Rp 1.3 trillion, more than tripling compared to the previous year. This increase was partly driven by the resolution of legal cases that provided significant gains.

As a major player in Indonesia's insurance industry, TUGU ranked fifth in market share in 2023. Its main advantage is direct access to businesses owned by the Pertamina group, its parent company. Furthermore, TUGU continues to expand its portfolio into reinsurance and retail segments to support income diversification.

AM Best also assessed that TUGU's strategic steps to improve its business portfolio will enhance its performance in 2024. The reaffirmation of the rating by AM Best indicates that TUGU remains one of the most trusted general insurance companies in Indonesia.

TUGU has achieved a global rating of "A-" for nine consecutive years, which is expected to boost customer trust in both corporate and retail segments. BCA Sekuritas analyst Ryan Santoso highlighted TUGU's strategy to expand into the retail sector, particularly in motor vehicle, fire & property, and travel insurance. He noted that collaborating with retail players and embracing digital transformation will facilitate TUGU's entry into retail after becoming a market leader in corporate services.

Ryan explained that retail characteristics focus on mass markets, which rely heavily on volume. To achieve scalable volume, TUGU's strategy involves strategic collaborations to enhance customer accessibility and digital insurance platforms.

He emphasized that digital transformation is crucial for creating accessible platforms for retail, as agency costs can be quite high.

"With a digital platform, the process becomes simpler, allowing customers to access TUGU's insurance products directly without agents or brokers. This saves on significant agency costs while maintaining high-quality underwriting," he added.

Ryan is optimistic that this strategy will enable TUGU to expand its market share in the retail segment with quality growth by 2025 and beyond.

"This aligns with TUGU's business strategy to increase retail penetration. Through strategic partnerships, TUGU can broaden its customer base with higher volumes while maintaining cost efficiency in agent commissions and optimal underwriting quality. This could lead to sustainable growth," he concluded.

To enter the retail segment, TUGU has prepared various digital initiatives like t-drive and t-ride for purchasing and claiming vehicle insurance, featuring safe driving experiences for users.

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Tag: Asuransi Tugu Pratama Indonesia TUGU