AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” (Excellent) of Fubon Insurance Co., Ltd. (Fubon Insurance) (Taiwan). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Fubon Insurance’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management.
Fubon Insurance’s risk-adjusted capitalisation remained at the strongest level at year-end 2020, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s adjusted capitalisation, including special reserves provisioned for the non-compulsory auto liability insurance business, continued to grow organically in 2020, through partial profit retention and favourable capital gains. The company continued to adopt a conservative investment strategy in 2020 with a majority of the invested assets in cash and bonds; it maintained a moderate exposure to domestic equities. The company’s overseas investments mainly consist of investment-grade bonds.
Fubon Insurance continued to generate profit in 2020, supported by positive underwriting and investments results. The company’s business continued to expand in 2020 with a gross written premium growth of 8.1%, while its underwriting experience in the overall underwriting portfolio remained stable and profitable. The company’s investment results remained supportive of its overall operating results through stable streams of interest and dividend income. Capital gains through other comprehensive income partially supported organic capital growth. Notwithstanding, Fubon Insurance’s overseas subsidiary in China continued to be loss-making in 2020, driven by negative results in underwriting and investment performances; however, the financial impact to the parent remains limited.
Fubon Insurance maintained its market-leading position in the Taiwan non-life market and continued to strengthen its market presence in 2020, accounting for approximately a quarter of the non-life market in terms of gross written premium. The company continues to leverage the business network of its parent group in sourcing business, while maintaining a moderately diversified underwriting portfolio in terms of products.
While Fubon Insurance is well-positioned at its current rating levels, negative rating actions could occur if there is a substantial deterioration in the company’s risk-adjusted capitalisation and operating performance. A material deterioration in the credit profile of the parent company, Fubon Financial Holding Co., Ltd. may also pose a negative impact on the ratings of Fubon Insurance.
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 use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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