HONG KONG--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Shinkong Insurance Company Limited (Shinkong Insurance) (Taiwan). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Shinkong Insurance’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management.
Shinkong Insurance’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remained at a robust level in 2019, underpinned by profit retention, an accumulation of special reserves, the company’s conservative investment strategy and a prudent reinsurance arrangement with relatively low reinsurance dependency.
The company’s operating performance continues to be supported by positive underwriting results and a profitable investment portfolio. The company’s claims experience deteriorated slightly in 2019, while its investment income from interest and dividends remains stable and supportive of the overall operating results. Notwithstanding, the company has taken a more prudent approach toward its investment performance projections in view of the heightened capital market volatility and low interest rate environment.
Shinkong Insurance remains the third-largest insurer in Taiwan’s non-life segment in terms of gross premium written. The company’s product mix remains moderately well-diversified with a gradual trend in lowering the proportion of the loss-making products. Distribution channels continue to be stable and diversified.
While Shinkong Insurance is well-positioned at its current rating level, negative rating actions could occur if the company exhibits a material and sustained deterioration in operating performance or if there is a substantial decline in its risk-adjusted capitalisation.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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