CONTACTS:
FOR IMMEDIATE RELEASE
HONG KONG - MAY 03, 2016 12:13 PM (EDT)
A.M. Best has assigned a financial strength rating of A (Excellent) and an issuer credit rating of “a” to Shinkong Insurance Co., Ltd. (Shinkong Insurance) (Taiwan). The outlook assigned to each rating is stable.
The ratings reflect Shinkong Insurance’s sound risk-adjusted capitalization, conservative catastrophe exposure management and solid market position as the third-largest insurer in Taiwan’s non-life insurance market via its diversified distribution channels, including in-house and dealers and brokers, as well as through banking and financial institutions. Shinkong Insurance enjoys high brand recognition with its long operating history in Taiwan’s non-life insurance market. The company is listed as independent on the Taiwan Stock Exchange and is not a subsidiary of any financial holding company.
The company’s favorable underwriting results are attributed to prudent risk selection process and an appropriate reinsurance program to manage its underwriting volatility in respect to catastrophe losses. The company also achieved investment performance that contributed positively to net retained earnings during 2012 to 2015.
Offsetting rating factors include Shinkong Insurance’s potential investment earnings volatility due to the company’s relatively high equity investment exposure, particularly on its strategic investment in affiliated equities. The historical underwriting losses arising from compulsory motor insurance business has significantly reduced the respective special reserves position over the past two years. This could lead to a potential reserves shortfall and impact the company’s underwriting performance and surplus position over the short to medium term.
While positive rating actions are not likely, negative rating actions could occur if the company experiences significant and continued deterioration in operating performance or if there are material capital 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 rating(s) 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.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.