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FOR IMMEDIATE RELEASE
HONG KONG - JANUARY 17, 2018 11:10 AM (EST)
A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of South China Insurance Co., Ltd. (South China Insurance) (Taiwan). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect South China Insurance’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
South China Insurance is well-capitalized and grew steadily between 2012 and 2016 through earnings retention and accumulation of claims equalization reserves. Its risk-adjusted capitalization level, as measured by Best’s Capital Adequacy Ratio (BCAR), remains solid and supportive of its current ratings. 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. This was mainly due to favorable expense control, although the loss ratio has trended higher recently due to a series of natural catastrophes.
These positive rating factors are offset partially by South China Insurance’s exposure to natural catastrophes within the region, which could lead to earnings volatility. Additional offsetting rating factors include the risks associated with the competitive market conditions in Taiwan, which could challenge the company’s business growth.
Positive rating actions are unlikely in the near term. 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 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 A.M. 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 A.M. 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 A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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