AM Best Affirms Credit Ratings of South China 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 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 balance sheet strength, which AM Best assesses 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 2020, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s adjusted capital and surplus, including special reserves provisioned for the non-compulsory auto liability insurance business, continued to grow in 2020 and 2021, supported by partial retention of earnings and capital gains, while its statutory solvency ratio remained at a healthy level. The company’s investment portfolio remained liquid and diversified with majority of the invested assets in investment grade bonds and cash. The company continues to manage its currency risk in its investment portfolio through currency hedging.

South China Insurance continues to be profit generating in 2020 and as of the third quarter of 2021, supported by positive underwriting and investment results. South China Insurance’s net combined ratio slightly deteriorated in 2020, mainly attributed to a higher net loss ratio from the company’s voluntary motor business, while the company’s net expense ratio remained stable in 2020. Notwithstanding, the company’s positive investment results continues to support the company’s overall operating results in 2020, through a stable stream of interest and dividend income. AM Best views the company’s favourable expense ratio and underwriting margin have shown a moderately narrowing trend from the industry average, over the past three years, partially due to the increased claims experience and tightening competitive edge in its expense ratio.

South China Insurance remains a medium-sized insurer in Taiwan’s non-life market. The company’s underwriting portfolio remains moderately diversified with a majority of its business in motor business. While motor business continues to contribute to the majority of the premium growth in 2020, casualty and personal accident and health business also exhibit a good level of growth momentum in 2020. 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.

Although South China Insurance is well-positioned at its current rating levels, negative rating actions may occur if there is a material decline in the company’s risk-adjusted capitalisation, or if there is a continued deteriorating trend or an increased level of adverse volatility in its operating performance.

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 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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