Credit ratings agency A.M. Best has maintained the “excellent” financial strength rating and “a” long-term issuer credit rating of Taiwan-based South China Insurance.
The ratings agency lauded South China’s strong operating performance, neutral business profile, and appropriate enterprise risk management. It also cited the insurer’s strong balance sheet and noted the insurer’s steady growth from 2012 to 2016, through earnings retention and accumulation of claims equalisation reserves.
“The company also maintained a profitable underwriting book, which has performed better than its peers in Taiwan’s highly competitive non-life insurance market over the past five years,” it said. “This was mainly due to favourable expense control, although the loss ratio has trended higher recently due to a series of natural catastrophes.”
However, the insurer’s exposure to natural calamities within the region stoked concern, as this could lead to earnings volatility. A.M. Best also said South China’s business growth could be challenged by competitive market conditions in Taiwan.
“Negative rating actions could occur if the company’s underwriting results deteriorate significantly or if there is a material decline in the company’s risk-adjusted capitalisation,” it noted.
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