Capitalisation supports ratings of non-life insurers, business profiles are constraints

Fitch Ratings has conducted a peer review of several non-life insurers in the Asia Pacific region, comparing and contrasting how key credit factors affect them.

Insurers in this peer group are: ABCI Insurance (ABCI), FWD General Insurance (FWD GI), Construction Guarantee (CG) and Seoul Guarantee Insurance (SGI).

Strong Capitalisation Supports Ratings: Fitch Ratings assesses the capitalisation and leverage of ABCI and FWD GI as ‘Strong’ and supportive of each insurer’s ratings. The assessments for CG and SGI are ‘Very Strong’, which also support both insurers’ ratings.

Business Profile Constrains Ratings: Fitch ranks ABCI’s business profile as ‘Less Favourable’ than that of other Hong Kong non-life insurers. FWD GI’s and CG’s business profiles are ranked ‘Moderate’ compared with that of other non-life insurers in Hong Kong and South Korea, respectively. Only SGI's business profile is ranked ‘Favourable’ compared with that of its Korean peers. The business profile scores of all the insurers in the peer group constrain their ratings.

Profitability Varies: Fitch’s assessment of these non-life insurers’ profitability is ‘Strong’ to ‘Good’. FWD GI’s profitability metrics are better than the ratio guidelines for an Insurer Financial Strength (IFS) Rating of ‘BBB’ for non-life insurers, while ABCI, CG and SGI have profitability metrics below the ratio guidelines for their corresponding final IFS Ratings.

Manageable Asset Risk: Fitch sees the asset risks of the non-life insurers in this peer group as manageable due to their limited exposure to risky assets. These assets comprise stocks, equity and hybrid-type funds as well as equity-type alternative investments.

Ownership Support: Fitch applies a one-notch uplift to ABCI, CG and SGI to account for the positive impact of their ownership on their IFS Ratings.

Source: Asia Insurance Review

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