Shinkong Insurance earns bright outlook

Shinkong Insurance earns bright outlook | Insurance Business Asia

Insurance News

Shinkong Insurance earns bright outlook

Credit rating agency sees improvement

Insurance News

By
Roxanne Libatique

Global credit rating agency AM Best has revised its outlook on Shinkong Insurance Company Limited’s (Shinkong Insurance) (Taiwan) long-term issuer credit rating (long-term ICR) from stable to positive.

The agency also affirmed the insurer’s financial strength rating (FSR) at A (Excellent) and long-term ICR at “a” (Excellent). The outlook for the FSR remains stable.

Factors behind changes in Shinkong Insurance’s credit ratings

The adjusted ratings are supported by Shinkong Insurance’s robust balance sheet, as evaluated by AM Best, in addition to its sufficient operating performance, unbiased business profile, and suitable enterprise risk management (ERM).

The improved long-term ICR outlook is anchored in the insurer’s consistent profitability amid a demanding operational landscape influenced by the COVID-19 pandemic and fluctuations in the capital markets. The company’s sound underwriting practices, advantageous claims outcomes, and stringent expense control have contributed to limiting pandemic-related financial impacts.

Shinkong Insurance also saw enhanced investment returns in 2023, marked by stable interest and dividend income and significantly reduced capital losses, bolstering its financial performance. Over the last five years, the firm’s underwriting profitability and equity returns have consistently surpassed those of its industry counterparts.

Shinkong Insurance’s risk-adjusted capitalisation

Shinkong Insurance’s risk-adjusted capitalisation remains at an optimal level, as determined by AM Best’s Capital Adequacy Ratio (BCAR).

The company’s capital and surplus enjoyed double-digit growth in 2023, primarily propelled by favourable operational results, though slightly offset by dividends. Its investment holdings are predominantly in cash and high-grade bonds, ensuring liquidity and stability.

Reinsurance reliance is moderate, with agreements secured with financially solid panels. The insurer’s risk-based capital ratio also continues to be healthy.