A.M. Best Upgrades Ratings of Taiping Reinsurance Company Limited

HONG KONG--()--A.M. Best has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and the issuer credit rating to “a” from “a-” of Taiping Reinsurance Company Limited (TPRe) (Hong Kong). The outlook for both ratings is stable.

The ratings reflect TPRe’s improvement in capitalization and underwriting performance. The ratings also acknowledge the support TPRe receives from its parent, China Taiping Insurance Holdings Company Limited (CTIH), in terms of capital contribution and operational support. CTIH’s major shareholder is China Taiping Insurance Group Ltd. (TPG), which is 100% owned by the Ministry of Finance of the People’s Republic of China.

TPRe is the only pure reinsurer under TPG, and it is fully integrated into the group’s operations and management. In 2012 and 2013, TPRe received capital injections of HKD 250 million and HKD 500 million from CTIH. CTIH is committed to continuously supporting TPRe going forward.

TPRe’s capitalization has improved over the past two years, as a result of the company’s retained earnings and capital injection from CTIH. TPRe’s risk-adjusted capitalization has also improved and is supportive of its current ratings.

TPRe returned to underwriting profitability in 2013. As of fiscal year-end 2013, there has been no further adverse loss-reserve development from the major catastrophe losses incurred prior to 2012. In addition, there was no major natural catastrophe event impacting TPRe’s underwriting result significantly during 2013.

Offsetting these positive rating factors is the competitive reinsurance market in the Asia-Pacific region. Competition from existing reinsurers and new entrants continues to squeeze the underwriting profit margins of reinsurance business from Asian markets. Any future major catastrophe events can potentially impact TPRe’s underwriting results and capitalization. To support its business development in different markets and lines of business, TPRe needs to continuously strengthen its catastrophe risk management and enterprise risk management capabilities.

Positive rating actions are unlikely in the near term. Negative rating actions could occur if the company's risk-adjusted capitalization declines to a level below A.M. Best's expectations due to a material deterioration in operating performance or aggressive business growth.

The methodology used in determining these interactive ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

  • Catastrophe Analysis in A.M. Best Ratings
  • Insurance Holding Company and Debt Ratings
  • Rating Members of Insurance Groups
  • Risk Management and the Rating Process for Insurance Companies
  • Understanding Universal BCAR

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.

This rating announcement has been issued by A.M. Best Asia-Pacific Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best Company
Jeff Yeung, +852-2827-3413
Associate Director, Analytics
jeff.yeung@ambest.com
or
Moungmo Lee, +852-2827-3402
General Manager, Analytics
moungmo.lee@ambest.com
or
Christopher Sharkey, +(1) 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best Company
Jeff Yeung, +852-2827-3413
Associate Director, Analytics
jeff.yeung@ambest.com
or
Moungmo Lee, +852-2827-3402
General Manager, Analytics
moungmo.lee@ambest.com
or
Christopher Sharkey, +(1) 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com