KUALA LUMPUR, March 18 -- Global credit rating agency, AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of ‘a-’ (Excellent) to Nan Shan General Insurance Co Ltd (Nan Shan General) Taiwan. The outlook assigned to 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).
According to a statement, Nan Shan General was established in 1962. On Sept 1, 2016, it was fully acquired by Nan Shan Life Insurance Co Ltd (Nan Shan Life), which is owned by Ruen Chen Investment Holding Co Ltd (Ruen Chen), a Taiwan-based joint venture funded by Ruentex Group (collective stake of 80 per cent of Ruen Chen) and Pou Chen Group (20 per cent).
Nan Shan General’s very strong level of balance sheet strength is underpinned by its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as the protective reinsurance arrangements, the diversified fixed-income oriented investment portfolio and strong liquidity.
United States-headquartered AM Best expects the company’s BCAR score to exhibit a downward trend over the forecast period as increases in underwriting and investment risks outpace organic growth in capital and surplus due to the moderately high dividend payout ratio. Notwithstanding, the company’s capital position is expected to remain supportive of its current ratings over the short to intermediate term.
During 2016 to 2020, Nan Shan General reported positive operating results, with average return-on-equity of 6.6 per cent for the five-year period, based on adjusted capital and surplus.
In recent years, the company’s investment performance continued to benefit from stable streams of interest and dividend income, as well as favourable capital gains. Going forward, AM Best expects the company’s asset allocation strategy to remain largely stable and generate low yet consistent net investment yields.
The company remains a small player in Taiwan’s non-life insurance market, with a market share of 3.2 per cent based on direct written premium in 2021. Leveraging the distribution support from Nan Shan Life’s life agency force, which contributed 85 per cent of Nan Shan General’s premium revenue in 2020, the company’s underwriting portfolio consists of a high proportion of personal line products, in particular voluntary motor.
For more information, visit www.ambest.com.
-- BERNAMA
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