KUALA LUMPUR, Jan 16 (Bernama) -- Global credit rating agency, AM Best has affirmed Taiwan’s South China Insurance Co Ltd (South China Insurance) Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent).
In a statement, AM Best said these credit ratings (ratings) which have a stable outlook, reflected South China Insurance’s balance sheet strength, that was assessed as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
South China Insurance’s risk-adjusted capitalisation remained at the strongest level at year-end 2022, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects its BCAR and balance sheet strength will remain supportive of the current ratings over the short to intermediate term.
Meanwhile, the company’s investment portfolio remained liquid and diversified with a majority of its assets held in investment grade bonds and cash, and it continues to manage currency risk in its investment portfolio through currency hedging.
South China Insurance has remained profitable over the last few years, with a five-year average return-on-equity ratio of 8.2 per cent (2018–2022), despite posted a 72 per cent year-on-year decline in net profit in 2022 due to a narrowed underwriting margin and unfavourable investment performance.
The company reported high single-digit growth in gross premiums written in 2022, and the first nine months of 2023, supported by motor, fire and casualty products.
While the company’s operating earnings in 2022 were negatively impacted by deterioration in loss ratio, the stable stream of interest and dividend income generated from its investment portfolio contributed to partially offset capital market volatility. The company remained profitable during the first three quarters of 2023.
South China Insurance remains a medium-sized insurer in Taiwan’s non-life market, and its underwriting portfolio remains moderately diversified with motors dominating its business, followed by fire, personal accident and health and casualty insurance.
The company continues to source its revenue from a diversified distribution network while leveraging cross-selling opportunities more broadly with its affiliates in Hua Nan Financial Holdings Co Ltd.
-- BERNAMA
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