HONG KONG–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-” of Union
Insurance Company Limited (Union) (Taiwan). The outlook of these Credit
Ratings (ratings) is stable.
The ratings reflect Union’s balance sheet strength, which AM Best
categorizes as very strong, as well as its adequate operating
performance, neutral business profile and appropriate enterprise risk
management.
The company continues to maintain a robust level of risk-adjusted
capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Its
capitalization was strengthened further in 2018 on a combined result of
reduced equity market risk, and increased capital and surplus from
continued earnings retention. The insurer’s highly liquid investment
portfolio, prudent reinsurance arrangements, debt-free balance sheet and
additional financial flexibility as a publicly traded company also
contribute to its very strong level of balance sheet strength.
Union extended its profitability trend in operating results in 2018.
Improved underwriting results in the personal voluntary motor line
helped offset higher combined ratios in the commercial fire and personal
accident lines. Although yields remained low, income from Union’s
investment portfolio and property holdings have continued to supplement
the company’s positive investment results over the past five years.
Union continued to hold the sixth-largest market share in 2018; this
improved slightly in spite of growing industry competition. While the
underwriting portfolio comprised a proportion of personal voluntary
motor that is higher than average, the company continued to strengthen
its distribution partnerships and expand its commercial product revenue,
such as commercial fire, engineering and liability.
Partially offsetting rating factors include the ongoing intense market
competition and potential volatility in underwriting results due to
assumed risks that are located predominantly in a catastrophe-prone
area. Compared with its premium base, the company’s compulsory motor
special reserves accounted for a proportion that was lower than the
industry average; this could pose a negative impact on the company’s
operating performance, should there be a shortfall in reserves.
Union’s credit profile is well-supportive of the current ratings and the
likelihood of positive rating actions is small over the short to
intermediate term. Negative rating actions could occur if the company
experiences a trend of significant and sustained deterioration in its
operating performance, or if there is a significant decline in
risk-adjusted capitalization.
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 Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
Contacts
James Chan
Senior Financial Analyst
+852 2827
3418
[email protected]
Christie Lee
Director, Analytics
+852 2827
3413
[email protected]
Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159
[email protected]
Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644
[email protected]
