A.M. Best Affirms Credit Ratings of Central Reinsurance Corporation

HONG KONG--(BUSINESS WIRE)-- A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Central Reinsurance Corporation (Central Re) (Taiwan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Central Re’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management.

Central Re’s risk-adjusted capitalization remained sound in 2017, supported by retained earnings accumulation and a prudent and highly liquid investment portfolio. The public company status also enhanced Central Re’s financial flexibility.

The company has demonstrated a favorable track record of underwriting results over the past five years, underpinned by stable and strong profitability in its life reinsurance segment and a generally stable combined ratio in the domestic non-life reinsurance segment, as well as a relatively benign catastrophe claims experience in its international book of business over the past five years. Moreover, the company’s large investment asset allocation to cash and cash equivalents, and fixed-income securities delivered a stable stream of interest income, despite the yield remaining low.

Leveraging its long operating history as the sole domestic reinsurer in Taiwan, Central Re has built solid and long-term relationships with local life and non-life insurers. The company has maintained a strong and stable market position and a diversified underwriting portfolio, with a majority of the premium income sourced directly from cedants, despite the geographic coverage remaining mainly in Taiwan.

Offsetting rating factors include potential volatility in earnings and capital and surplus, arising from Central Re’s catastrophe exposures. The company has arranged a comprehensive retrocession program to mitigate the undue risks. The sustained soft condition and increased competition in the reinsurance market continue to post challenges to the operating environment.

While positive rating actions are not likely in the near term, negative rating actions could occur if the company experiences significant and sustained deterioration in its operating performance, or if there is a material adverse change in its risk-adjusted capitalization.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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A.M. Best

James Chan, +852-2827-3418

Senior Financial Analyst

james.chan@ambest.com

or

Christie Lee, +852-2827-3413

Director, Analytics

christie.lee@ambest.com

or

Christopher Sharkey, +1-908-439-2200, ext. 5159

Manager, Public Relations

christopher.sharkey@ambest.com

or

Jim Peavy, +1-908-439-2200, ext. 5644

Director, Public Relations

james.peavy@ambest.com

Source: A.M. Best