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Ratings agency A.M. Best has maintained its positive ratings for the Singapore subsidiary of Chinese state-owned China Taiping Insurance, amid the firm’s strong balance sheet and strong operating performance.
China Taiping Insurance Singapore (CTIS) saw its financial strength rating affirmed at ‘A’ or ‘excellent’, and its long-term issuer credit rating at ‘a’. A.M. Best said the outlook for these ratings is stable.
The ratings also reflect the firm’s neutral business profile and appropriate enterprise risk management, A.M. Best added. “CTIS has a good earnings track record, as demonstrated by a five-year average return on equity of close to 10%,” it said. “Income derived from its sizable investment portfolio has been a stable contributor to CTIS’s operating results.”
The company’s risk-adjusted capitalization, as measured by A.M. Best’s Capital Adequacy Ratio (BCAR), is at its strongest level, supported by good asset quality and low underwriting leverages.
However, the ratings agency said the ratings were partly offset by increasing negative pressure on operating performance amid soft market conditions and competitive pressures.
“While underwriting margins remain positive, CTIS’s operating performance lead has narrowed and converged toward Singapore’s non-life industry average over the past five years,” it stated.
Though A.M. Best does not expect it in the near term, it warned of a downgrade if the company fails to regain its operating performance lead over the industry average.
