2014-03-21 18:32:02 -
A.M. Best has assigned a financial strength rating of A (Excellent) and an issuer credit rating of “a+” to Fubon Insurance Co., Ltd. (Fubon Insurance) (Taiwan). The outlook assigned to both ratings is stable.
The ratings recognize Fubon Insurance’s long track record of strong operating performance driven by profitable underwriting and investment results, its sound risk-adjusted capitalization, high brand recognition and long established market leader position in most business lines within the non-life insurance market in Taiwan. The ratings also consider the distribution synergies and investment management support Fubon Insurance receives as a wholly-owned subsidiary of Fubon Financial Holding Co., Ltd. (Fubon Financial), one of the leading financial holding companies encompassing life insurance, banking and securities business in Taiwan.
Although Fubon Insurance
has a high geographical concentration in a catastrophe-prone region, this is mitigated by the company’s underwriting discipline and effective reinsurance strategy. The company benefits from Fubon Financial’s investment management capability to navigate through financial market volatilities, as evidenced by the positive investment returns recorded over the past five years.
Partially offsetting these positive rating factors include the potential investment earnings volatility due to the company’s relatively high equity investment exposure. The sustainability of business growth and underwriting profitability is expected to be challenged by the anticipated slowdown and competitive market conditions in Taiwan.
Positive rating actions may occur if Fubon Insurance continues to demonstrate a stable and sustainable organic capital growth to strengthen its risk-adjusted capitalization. Negative rating pressure may occur if the company demonstrates significant and continued deterioration in operating performance, or if there are material capital and/or dividend payouts that lead to a substantial decline in its risk-adjusted capitalization.
The methodology used in determining these 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 : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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.
Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
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