HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of South China Insurance Co., Ltd. (South China Insurance) (Taiwan). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect South China Insurance’s sound risk-adjusted capitalization, track record of favorable operating performance and its diversified distribution capabilities, which include direct, agents and brokers, car dealers and financial institutions. The company also benefits from synergies with its publicly traded parent, Hua Nan Financial Holdings Co. Ltd. (HNFH), in risk management and cross-selling opportunities.
South China Insurance’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains solid and supportive of its current ratings. The company has maintained a moderate level of underwriting leverage over the past five years. Retention of operating profits, underpinned by a continuously profitable underwriting book and stable investment returns, has contributed to stronger capital and surplus. The company also maintains an adequate level of special reserves to buffer potential losses from natural catastrophes.
Offsetting rating factors include South China Insurance’s exposure to natural catastrophes across the region, which could lead to earnings volatility. The continued competitive market conditions also could challenge the company’s business growth and underwriting profitability.
Positive rating actions are unlikely in the medium term. Negative rating actions may occur if the company’s operating performance deteriorates or if there is a material decline in the company’s risk-adjusted capitalization.
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 A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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