AM Best Affirms Credit Ratings of Nan Shan General Insurance Co., Ltd.
28 Marzo 2024 - 7:47AM
Business Wire
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). 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 (ERM).
Nan Shan General’s risk-adjusted capitalisation, as measured by
Best’s Capital Adequacy Ratio (BCAR), has significantly improved
and is assessed as being at the very strong level as of year-end
2023. The result is underpinned by the capital contribution of TWD
1.5 billion in cash in 2023, from Nan Shan General’s immediate
parent, Nan Shan Life Insurance Co., Ltd (Nan Shan Life), to
restore Nan Shan General’s capital strength, following the large
claims arising from pandemic insurance since 2022. AM Best expects
Nan Shan General to maintain its level of risk-adjusted
capitalisation over the short to intermediate term. Offsetting
factors in the balance sheet strength assessment include the
company’s heightened exposure to catastrophe risks in tandem with
increased retention levels in its reinsurance arrangements amid
rising reinsurance costs, as well as the moderately high historical
dividend payout ratio, despite the company not declaring dividends
in 2023.
Nan Shan General reported positive operating results in 2023,
partially supported by the release of reserves provisions for
pandemic insurance claims and positive investment performance. The
company’s return on equity has been restored to a high single-digit
level. Nan Shan General achieved double-digit growth on gross
premiums written in 2023, mainly driven by expansions in voluntary
motor, travel insurance and commercial lines. The company has
increased premium retention in the major voluntary motor line since
2023, which continues to be a major driver of the overall
underwriting results. This product line has exhibited an increasing
trend in the loss ratio, while its net commission expense is
projected to increase due to reduced reinsurance commission
income.
The company’s bond portfolio has continued to contribute stable
streams of interest income, which helped to partially offset
volatility in equity investments during 2023. AM Best expects Nan
Shan General to continue to focus on domestic fixed-income
securities and maintain moderate exposure to equity securities with
an aim to boost overall investment returns.
Nan Shan General is a wholly owned subsidiary of Nan Shan Life,
which 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.
Negative rating actions could occur if there is a material
decline in Nan Shan General’s risk-adjusted capitalisation, for
example, due to a much faster-than-expected expansion in
underwriting and/or investment risks that outpaces the growth in
capital and surplus, or the company experiences large underwriting
losses that significantly erode its capital strength. Negative
rating actions could also occur if there is a sustained
deterioration in the company’s operating performance. Additionally,
negative rating actions could occur if Nan Shan Life experiences a
significant deterioration in its credit fundamentals, which AM Best
views as having a material negative impact on Nan Shan General.
Although it is deemed to be unlikely over the short to intermediate
term, positive rating actions could occur if the company
demonstrates sustainable improvement in operating performance while
maintaining the appropriate ERM assessment.
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 Performance
Assessments, 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.
Copyright © 2024 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240328207437/en/
Madison Fan Financial Analyst +852 2827
3416 madison.fan@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
James Chan Director, Analytics +852 2827
3418 james.chan@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com