CTBC Financial-owned Taiwan Life Insurance’s asset risk has eased

87 CTBC LOGO_Green BG1Taiwan Life Insurance, a Taipei-based insurer owned by Taiwanese financial firm CTBC Financial Holdings, has seen its asset risk fall due to growth in shareholders’ equity and reduction in investment in below-investment grade bonds, according to Fitch Ratings.

The insurer’s financial performance is considered as ‘Good’. Its pre-tax return on assets averaged 0.7% from 2018 to 2020, supported by mortality and morbidity gains.

Fitch Ratings has revised the outlook on Taiwan Life Insurance’s Insurer Financial Strength (IFS) Rating and National IFS Rating to ‘Stable’ from ‘Negative’. The IFS Rating is affirmed at ‘BBB+’ (Good) and the National IFS Rating at ‘AA-(twn)’.

The outlook revision reflects Fitch’s expectation that Taiwan Life will sustain its favourable operating results and sound capital buffer in light of its asset-management strategy and product mix.

Fitch expects Taiwan Life to maintain ‘Good’ capital buffers to support its business expansion. Its risk-based capital ratio was 310% at end-2020 and its capital score, as measured by Fitch’s Prism Model, remained well into the ‘Adequate’ category at end-2020 and end-2019, underpinned by growth of value of business in-force and various loss-absorbing reserves. The company’s financial leverage ratio was 10% at end-2020, below the ratio guidelines for IFS ‘BBB’ rated insurers. Fitch expects Taiwan Life’s parent CTBC Financial Holding to provide capital support when necessary.

Fitch has ranked Taiwan Life’s business profile as ‘Favourable’ compared with those of all other life insurance companies in the market due to its ‘Favourable’ operating scale, well-diversified distribution channels and product lines, and substantive business franchise. The ranking results in Fitch scoring Taiwan Life’s business profile at ‘a-‘ under its credit factor scoring guidelines.

Asia Insurance Review

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