AM Best Affirms Credit Ratings of Fubon Insurance Co., Ltd.

HONG KONG–()–AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” (Excellent) of Fubon Insurance Co., Ltd. (Fubon Insurance) (Taiwan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Fubon Insurance’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management.

Fubon Insurance’s risk-adjusted capitalisation remained at the strongest level at year-end 2021, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s adjusted capitalisation, including special reserves provisioned for the non-compulsory auto liability insurance business, continued to grow organically in 2021, through partial profit retention and favourable capital gains. The company continued to adopt a conservative investment strategy in 2021, with a majority of the invested assets in cash and cash equivalents, bonds, as well as a moderate exposure to domestic equities. The company’s overseas investments mainly consist of investment-grade bonds.

Due to the deteriorated COVID-19 situation in Taiwan since April 2022, Fubon Insurance has been impacted negatively by significant claims related to pandemic insurance policies. The company’s ultimate parent, Fubon Financial Holding Co., Ltd. (Fubon Financial Holding), completed a capital injection of TWD 15 billion in August 2022. AM Best views the recent capital injection as sufficient to absorb the potential claims development of pandemic insurance claims and support the very strong balance sheet strength assessment.

Fubon Insurance continued to generate profit in 2021, supported by positive underwriting and investments results. The company’s business continued to expand in 2021 with a gross premium written (GPW) growth of 10.9%, while its underwriting experience in the overall underwriting portfolio remained stable and profitable till 2021. However, due to the surge in pandemic-related claims in 2022, the company reported a net loss of TWD 3.3 billion for the first half of 2022, about half of 2021 net profit. While the ultimate loss for 2022 and 2023 remains uncertain at this stage, AM Best views the negative impact to the company’s profit and loss as a one-off event, as the pandemic-related product will be completely ran-off in the first half of 2023. Given its track record of favourable operating results in traditional lines, the company should be able to recoup its losses over the short to intermediate term.

The company’s investment results remained supportive of its overall operating results through stable streams of interest and dividend income. Capital gains through other comprehensive income partially supported organic capital growth. Fubon Insurance’s overseas subsidiary in China managed to turn a profit in 2021, mainly due to a realised capital gain in its long-term equity investments. Notwithstanding, the business scale of the Chinese subsidiary remains small in comparison to Fubon Insurance’s business.

Fubon Insurance maintained its market-leading position in the Taiwan non-life market and continued to strengthen its market presence in 2021, accounting for approximately a quarter of the non-life market in terms of GPW. The company continues to leverage the business network of its parent group in sourcing business, while maintaining a moderately diversified underwriting portfolio in terms of products.

Negative rating actions could occur if there is a substantial decline in Fubon Insurance’s risk-adjusted capitalisation, for example, due to adverse development and a much higher-than-expected ultimate loss from pandemic insurance, and without timely additional capital support from its ultimate parent, Fubon Financial Holding. Negative rating actions also could occur if Fubon Insurance exhibits material and sustained deterioration in operating performance, particularly in terms of the non-pandemic traditional underwriting portfolio and investment results. A material deterioration in the credit profile of the parent company, Fubon Financial Holding, also may have a negative impact on Fubon Insurance’s ratings.

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 AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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