SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Thaire Life Assurance Public Company Limited (Thaire Life) (Thailand). The outlook of these Credit Ratings (ratings) is stable. Concurrently, AM Best has withdrawn these ratings as the company has requested to no longer participate in AM Best’s interactive rating process.
The ratings reflect Thaire Life’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Thaire Life’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which remained at the strongest level at fiscal year-end 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best considers the company to have a moderate risk investment portfolio given its exposure to higher-risk asset classes of equities and mutual funds, although this is in part mitigated by a good level of overall portfolio diversification. Partially offsetting balance sheet strength factors include the company’s high dividend payout ratio over recent years, which has constrained growth in its capital and surplus. In addition, AM Best views the company’s modest absolute capital base to have the potential to increase the sensitivity of its capital adequacy to shock events, as well as to changes in future performance.
AM Best views Thaire Life’s operating performance as adequate, with a five-year average return-on-equity ratio of 8.7% (2019-2023). Underwriting margins have thinned over time due to business growth in the less profitable health reinsurance notwithstanding that the company has generated consistent underwriting profits over the past five years. In addition, the company’s underwriting performance in recent periods was impacted negatively by medical inflation and higher medical insurance utilisation and is expected to remain constrained over the near term. Nevertheless, Thaire Life is expected to continue growing and diversifying its business portfolio while executing remedial actions aimed at improving profitability. Investment income, comprising interest and dividend income, also is expected to remain supportive of overall earnings.
AM Best considers Thaire Life’s business profile to be neutral. The company is the only domestic life reinsurer in Thailand, and it maintains long-standing relationships with key cedants. Future business expansion is expected to be supported by new product development initiatives, strategic business partnerships and distribution channel diversification.
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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