SINGAPORE–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Thaire Life Assurance Public Company Limited (Thaire Life) (Thailand). The outlook of these Credit Ratings (ratings) is negative.
The ratings reflect Thaire Life’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Thaire Life’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation that remained at the strongest level at fiscal year-end 2020, 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 mitigated partially by a good level of overall portfolio diversification. In addition, the company’s dividend payout ratio has been high over recent years, although retained earnings have remained sufficient to support business growth. The company’s modest absolute capital base is also viewed to have the potential to increase the sensitivity of capital adequacy to balance sheet shocks, including from mortality rate increases or other stress events.
AM Best assesses Thaire Life’s operating performance as strong, with the company having reported a five-year weighted average return-on-equity ratio of 19% (2016-2020). Notwithstanding this, the negative outlooks reflect AM Best’s view that ongoing competitive market conditions in Thailand’s life and health market, the COVID-19 pandemic, as well as Thaire Life’s business growth in the less profitable health class of business, will continue to place pressure and drive potential volatility in the company’s operating performance fundamentals over the intermediate term.
AM Best considers Thaire Life’s business profile to be neutral. The company is the only domestic life reinsurer in Thailand and has long-standing relationships with key cedants. In light of challenging market conditions in 2020, the company’s gross premium written was flat during the year, with higher demand for health reinsurance products offsetting a contraction in the whole life and credit life segments. AM Best expects future business expansion 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.
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 www.ambest.com.
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