AM Best Affirms Credit Ratings of Mandal Daatgal JSC

HONG KONG–()–AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” (Fair) of Mandal Daatgal JSC (Mandal) (Mongolia). The outlook of these Credit Ratings (ratings) is stable.

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

Mandal’s balance sheet strength is supported by its risk-adjusted capitalisation, which is at the strongest level as of year-end 2020, as measured by Best’s Capital Adequacy Ratio (BCAR), although the absolute size of its capital base remains small at MNT 22.7 billion (USD 8.6 million). Besides the company’s investment portfolio, which is exposed primarily to lower-rated and non-rated fixed income securities, other offsetting factors of the company’s balance sheet strength assessment include the quality and diversification of its reinsurance treaty panel, which AM Best views as less favourable compared with most other large regional and global insurers.

Mandal’s operating performance has been strong and consistent, with key operating metrics generally outperforming those of its regional peers. This is attributed to its history of profitable underwriting and investment, as demonstrated by a five-year average combined ratio of approximately 95% and an average operating ratio of 72%. During fiscal year 2020, the company’s combined ratio exceeded 100%, mainly due to a higher-than-expected number of large losses in the motor physical damage line and the commercial property line.

In response, Mandal has implemented various initiatives to stabilise and improve its prospective underwriting performance, which AM Best expects should help Mandal’s underwriting and operating results to revert to a strong level.

Mandal is a leading non-life insurer in Mongolia, which underwrites property/casualty insurance in personal and commercial lines. For fiscal year 2020, the company’s gross premium written (GPW) amounted to MNT 33.2 billion, and ranked second in the Mongolian non-life insurance market as of year-end 2020 in terms of GPW. In AM Best’s opinion, Mandal’s business profile currently benefits from its strong control over its distribution, low-acquisition cost structure, and expertise in the risks that it intends to underwrite and retain in its domestic market. However, these advantages are offset partly by a number of risk factors, which include the company’s limited scale and high business concentration risk associated with its narrow geographical focus.

The stable outlooks reflect AM Best’s expectation that Mandal’s operating performance will remain profitable, although the company’s underwriting results are likely to remain volatile until the company can achieve much greater scale.

Negative rating actions could occur if there is significant deterioration in Mandal’s risk-adjusted capitalisation due to unexpected capital repatriation, or if its profitability consistently falls below AM Best’s expectation. Negative rating actions also could occur if the company exhibits a material deterioration in the quality of its ERM to a level that no longer supports the appropriate ERM assessment.

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 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 © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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