SINGAPORE--(BUSINESS WIRE)--AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Dhipaya Insurance Public Company Limited (Dhipaya) (Thailand).
These Credit Ratings (ratings) reflect Dhipaya’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The revision of the outlooks to stable reflects AM Best’s increased comfort level over the company’s ability to navigate the ongoing challenging operating environment driven by the COVID-19 pandemic. Whilst Dhipaya reported unrealised losses arising from investment assets amid recent market volatility, its retained earnings remained positive in 2020 and shareholders’ equity continued to grow. Prospectively, AM Best expects Dhipaya’s risk-adjusted capitalisation to remain at the strongest level, supported by robust internal capital generation and reduced pressure from long duration policies. In addition, AM Best expects Dhipaya’s strong operating performance to be supported by a good balance of earnings and the company’s underwriting portfolio, which is less exposed to highly competitive lines of business.
Other balance sheet strength considerations include moderate investment risk arising from Dhipaya’s notable allocation to domestic equities, as well as the company’s heavy reliance on reinsurance to support the underwriting of very large risks and to manage catastrophe exposure. The reliance on reinsurance is, however, partially mitigated by the use typically of high credit quality reinsurers.
The company has a track record of strong operating performance, with a five-year average combined ratio and operating ratio of 79% and 68%, respectively (2016-2020). It also delivered an average return-on-equity ratio of 23% over the same period. These metrics outperformed local market benchmarks by a notable margin. Excellent underwriting performance is attributable to the company’s personal accident, health, fire and industrial-all-risk lines of business, in addition to favourable reinsurance commission income. Investment income, which is comprised of mainly interest and dividend income, continues to provide a sizable contribution to overall earnings.
Dhipaya is the second largest non-life insurer in Thailand with a market share of approximately 9.9%, based on direct premium written in 2020. The company is viewed by AM Best to have a dominant position in several domestic segments, including for fire, industrial-all-risk and personal accident business. The company’s business profile also benefits from a level of shareholder support, including for business referrals and access to extensive country-wide distribution networks.
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