SINGAPORE--(BUSINESS WIRE)--A.M. 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. (CTIS) (Singapore), a wholly owned subsidiary of China Taiping Insurance Holdings Company Ltd. (CTIH). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect CTIS’ balance sheet strength, which A.M. Best categorizes as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings also reflect the lift the company receives from its parent, CTIH.
The company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is at the strongest level, supported by good asset quality and low underwriting leverages.
CTIS has a good earnings track record, as demonstrated by a five-year average return on equity of close to 10%. Income derived from its sizable investment portfolio has been a stable contributor to CTIS’ operating results.
Offsetting rating factors include increasing negative pressure on operating performance amid soft market conditions and competitive pressures. While underwriting margins remain positive, CTIS’ operating performance lead has narrowed and converged toward Singapore’s non-life industry average over the past five years.
Positive rating actions are unlikely in the near term. Negative rating actions may occur from a failure to regain its operating performance lead over the industry average. An unfavorable reassessment of CTIS’ strategic role in the group also could result in negative rating actions.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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