HONG KONG, April 16 – AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Shinkong Insurance Company Limited (Shinkong Insurance) (Taiwan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Shinkong Insurance’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.

Shinkong Insurance’s risk-adjusted capitalization remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s capital and surplus continued to grow organically in 2021, mainly driven by partial profit retention and an accumulation of special reserves.

The company’s risk-based capital ratio is at a healthy level and above the regulatory requirement with a good level of buffer. The company’s investment portfolio has been liquid and stable, with the majority of its investment assets held in cash and investment grade bonds. The company’s reinsurance dependency remains moderate, and is placed with reinsurer panels of good credit quality.

Shinkong Insurance continued to be profitable in 2021, supported by positive underwriting and investment results. The company’s net combined ratio improved slightly in 2021, mainly driven by a lower net loss ratio in its motor and accident line, while the company’s overall net expense ratio has been stable. Shinkong Insurance’s investment portfolio continues to generate stable investment income to support its overall operating results.

Shinkong Insurance remains the third-largest insurer in Taiwan’s non-life insurance market based on gross premium written. The company’s underwriting portfolio has been moderately diversified, with a majority of its business in motor.

Shinkong Insurance continued to refine its underwriting portfolio in 2021 with a faster expansion into non-motor product lines than in motor business to achieve a more diversified underwriting portfolio. The company’s distribution remains stable and diversified; Shinkong Insurance uses both direct and affiliated insurance agency channels, with a good level of control to distribute its products.

Whilst Shinkong Insurance is well-positioned at its current rating level, negative rating actions could occur if the company exhibits a material and sustained deterioration in its operating performance, or if there is a substantial decline in its risk-adjusted capitalisation.