KUALA LUMPUR, March 20 (Bernama) -- Global credit rating agency AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Nan Shan General Insurance Co Ltd (Nan Shan General), Taiwan.
According to a statement, the outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Nan Shan General’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Nan Shan General’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, has materially deteriorated as of year-end 2022, due to large claims arising from pandemic insurance products.
Unfavourable capital losses from investments and a dividend payout during the first half of 2022 also weakened the company’s capital position.
AM Best expects the company to restore its capital strength from explicit financial support provided by its immediate parent, Nan Shan Life Insurance Co Ltd (Nan Shan Life), as well as resume its capital growth through the retention of net profits derived from non-pandemic insurance underwriting and investment over the intermediate to long term, based on the company’s business and capital plans.
United States-headquartered AM Best expects the company’s risk-adjusted capitalisation to restore to a supportive level in the second half of 2023.
AM Best expects the ultimate claims amount to remain stable in the first half of 2023. The company’s monthly gross claims paid has shown a consistent declining trend since November 2022.
The agency considers the pandemic insurance loss as a one-off event, and the company should be able to gradually recoup its losses via the traditionally profitable non-pandemic insurance underwriting and investment results, although it is unlikely to do so over the short to intermediate term.
Nan Shan Life is the third-largest life insurance company in Taiwan in terms of total assets. While Nan Shan General’s business scale is small within Nan Shan Life, the company benefits from parental support in terms of the shared brand recognition, strong distribution support and operating and capital commitments.
-- BERNAMA
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