The operating performance of Mongolian National Reinsurance (Mongolian Re) is viewed as adequate, says AM Best.
The reinsurance company has delivered an average 30% annual gross premium written growth since 2018, and net profits each year. While maintaining a mid-single-digit return on equity (ROE) from 2018 to 2023, its 2024 ROE declined mildly to 2.3% due to a significant index-based livestock insurance (IBLI) claim.
In a commentary published on 4 December 2025, the global rating agency said that the reinsurer’s net profit is driven by robust investment results, delivering an annual investment yield of over 10% over the years.
On the flip side, Mongolian Re’s underwriting performance remained unprofitable, attributed to its volatile loss performance and high expense ratio. As its insurance portfolio size increases, the company expects its expense ratio to gradually decline with economy of scale.
Nonetheless, over the short term, while expecting a positive bottom line, investment income will remain the profit driver while underwriting performance remains marginal.
Ratings affirmed
AM Best has affirmed Mongolian Re’s Financial Strength Rating of ‘B’ (Fair) and the Long-Term Issuer Credit Rating of ‘bb+’ (Fair). The outlook of these Credit Ratings (ratings) is stable.
AM Best said, “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). Mongolian Re’s very strong balance sheet assessment is underpinned by its strongest risk-adjusted capitalisation level as measured by Best’s Capital Adequacy Ratio (BCAR).”
Mongolian Re’s investment portfolio remains liquid and prudent, consisting of only cash and deposits mainly placed with domestic systemically important banks. The company maintains appropriate retrocession coverage over its index-based livestock insurance (IBLI) and other volatile lines, with sound credit quality retrocessionaire counterparties.
Going forward, AM Best expects the company to gradually replenish its IBLI reserves for future claims. Offsetting factors include its limited capital size, which was MNT48.95bn ($18.68m) as of year-end 2024, under the IFRS17 accounting standard, as well as the inherent systemic risk in Mongolia’s financial and exchange markets compared to more developed ones.
Business profile
Mongolian Re’s business profile is assessed as limited, considering its humble top line and geographic concentration in the Mongolian market, when compared to its international non-life reinsurance peers.
The reinsurer was incorporated in 2014, as a wholly owned company of the Ministry of Finance of Mongolia (MoF) and it has been the sole operator of the IBLI pool. With the agriculture sector contributing over 10% of Mongolia’s gross domestic product and one third of the nation’s labour force, Mongolian Re plays a critical role in the domestic insurance market by providing nationwide insurance coverage to the welfare of livestock and herders.
The company has gradually expanded its coverage since 2018 to other lines as well including property, motor, aviation, liability, personal accident and guarantee. The company has formed strategic partnerships with more sophisticated global reinsurers for technical support in emerging lines and new risks.
AM Best also said, “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 and solvency reports to the local insurance regulator, the Financial Regulatory Commission, on a regular basis. Its solvency ratio maintains a healthy buffer over the regulatory minimum level.”