Source: asiainsurancereview.com

Fitch Ratings has conducted a peer review of six composite insurers in the Asia Pacific region and assessed their profitability to be ‘Very Strong’ to ‘Good’.

The insurers in this peer group are: China Taiping Insurance Group (TPG), Etiqa Insurance (representing the whole group of Etiqa entities), Sri Lanka Insurance Corporation (SLIC), Sunshine Life Insurance (SLI), Sunshine Property and Casualty Insurance (SPCI) and Huatai Property & Casualty Insurance (Huatai P&C). All six insurers’ profitability metrics are better than the ratio guidelines for their corresponding IFS Ratings, says Fitch.

Business Profiles Support Ratings: Fitch Ratings ranks the business profiles of TPG, Etiqa, SLIC, SLI, and SPCI as ‘Favourable’ compared with other non-life insurers in their corresponding markets. The business profile scores are at least commensurate with, if not better than, their Insurer Financial Strength (IFS) Ratings. Only Huatai P&C is ranked ‘Moderate’ in terms of business profile. Its business profile score is lower than its IFS Rating.

Varied Capitalisation and Asset Risk: Fitch’s assessment of the insurers’ capitalisation ranges from ‘Very Strong’ to ‘Moderately Weak’. The divergence is mainly due to varying degrees of asset risk. Etiqa and Huatai P&C have limited asset risk, resulting in capitalisation scores that support their IFS Ratings. On the other hand, the IFS Ratings of TPG, SPCI and SLI are constrained by the insurers’ only ‘Good’ capitalisation, owing to high investment risk from risky asset exposure. Fitch scores SLIC’s investment and asset risk at ‘cc’ on the international rating scale due to the insurer’s high risky-asset exposure, including to the Sri Lankan sovereign and sovereign-related investments.

Ownership Support: Fitch applies a two-notch uplift to TPG’s IFS Rating due to the positive impact of its sovereign ownership.