JULY 23, 2020 12:08 PM (EDT)

AM Best Affirms Credit Ratings of China Taiping Insurance (Singapore) Pte. Ltd.

 Susan Tan
Financial Analyst
+65 6303 5023

Yuan Tian
Senior Financial Analyst
+65 6303 5016

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


SINGAPORE - JULY 23, 2020 12:08 PM (EDT)
AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of China Taiping Insurance (Singapore) Pte. Ltd. (CTPIS) (Singapore). The outlook of these Credit Ratings (ratings) is stable. CTPIS is a wholly owned subsidiary of China Taiping Insurance Holdings Company Limited (CTIH), which is ultimately majority owned by China Taiping Insurance Group Ltd. (TPG), a Chinese state-owned financial and insurance group.

The ratings reflect CTPIS’ balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). In addition, CTPIS benefits from rating enhancement from the TPG group.

CTPIS’ balance sheet strength assessment is underpinned by risk-adjusted capitalisation that AM Best expects to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite increased capital requirements from the company’s expansion into Singapore’s life insurance segment, AM Best expects a series of planned capital injections and the ongoing financial commitment from the TPG group to support CTPIS’ capital adequacy and new business growth. A partially offsetting balance sheet strength factor is the company’s modest absolute capital base, which increases the sensitivity of risk-adjusted capitalisation to growth beyond expectation or weaker than expected technical performance.

The company’s operating performance is viewed as adequate. The non-life operations have generated robust underwriting profits over the past five years and in general have performed better than the domestic market average. Despite this, a deteriorating trend in the company’s combined ratio has been seen in recent periods, driven by both increasing loss and expense ratios. The company’s pre-tax operating results in 2018 and 2019 have also been impacted by elevated start-up costs and technical provisions associated with CTPIS’ commencement of its life insurance activities in Singapore. Investment earnings remain a positive driver of overall earnings. Whilst AM Best expects CTPIS to exhibit adequate operating performance over the medium term, elevated expenses arising from the development of its life insurance operations, along with a level of potential volatility in both underwriting and investment results from the COVID-19 environment, may dampen earnings over the near term.

AM Best views CTPIS’ business profile as neutral. The company is a medium sized player in Singapore and has a long-established position within the domestic non-life segment and a developing profile in the local life segment. Following receipt of a life insurance license during 2018, CTPIS has commenced offering life insurance protection, savings and retirement planning products for high net worth and affluent individuals in the Singapore market. Life insurance operations generated over 50% of gross written premium in 2019 and are expected to continue to grow notably over the medium term. The company benefits from its affiliation with the TPG group, which gives it a level of preferential access to insured risks emanating from Chinese enterprises in the local market.

AM Best considers CTPIS’ ERM approach to be appropriate given the size and complexity of its current operations. Risk management framework and capabilities are viewed to have benefited over a number of years from technical support and guidance provided by the TPG group. Nonetheless, AM Best views the start-up nature of its life operations to result in heightened execution risk over the medium term.

CTPIS’ ratings incorporate rating enhancement from the TPG group. Despite CTPIS’ operations accounting for a relatively small portion of the group’s revenues and earnings, it is considered important to the group in terms of accessing the Singapore insurance market and growing its overseas business. CTPIS benefits from implicit and explicit support from group companies that form part of TPG.

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 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, 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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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