NOVEMBER 07, 2019 12:13:54 Eastern Standard Time
AM Best Affirms Credit Ratings of Fubon Insurance Co., Ltd.
FOR IMMEDIATE RELEASE
HONG KONG - NOVEMBER 07, 2019 12:13:54 Eastern Standard Time
The ratings reflect Fubon Insurance’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management.
Fubon Insurance’s risk-adjusted capitalization remained at the strongest level at year-end 2018, as measured by Best’s Capital Adequacy Ratio (BCAR). The prudent reserving practices and comprehensive reinsurance program adopted by the company continues to safeguard its capital position from undue underwriting risk, while the modest level of profit retention has contributed to partially mitigate volatility arising from capital market fluctuations over the past five years.
The company’s operating results continue to be stable and positive, mainly driven by the favorable investment earnings and profitable results from its domestic underwriting portfolio, albeit partially offset by operating losses from its China operations.
Fubon Insurance’s favorable business profile is underpinned by its long-term market-leading position, and solid brand recognition in Taiwan’s non-life insurance market, as well as its extensive distribution network. Going forward, AM Best expects the company’s overall market competitiveness to remain credit positive for its ratings.
Offsetting rating factors includes heightened uncertainties in domestic and overseas capital market conditions, coupled with rising foreign currency hedging cost. While the company has demonstrated an improving trend in operating profitability at its overseas business in China over the past few years, the continued negative results of the overseas portfolio remain an offsetting factor to the company’s overall operating performance. Moreover, the company’s underwriting portfolio is concentrated in catastrophe-prone geographies.
Positive rating actions could occur if the company demonstrates a sustainable improvement in its operating performance while maintaining robust risk-adjusted capitalization. Negative rating actions could occur if there are material capital and/or dividend payouts that lead to a substantial decline in its risk-adjusted capitalization.
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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency and information provider with an exclusive focus on the insurance industry.