AM Best Affirms Credit Ratings of Union Insurance Company Limited

HONG KONG--(BUSINESS WIRE)--
AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Union Insurance Company Limited (Union) (Taiwan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Union’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.

Union’s risk-adjusted capitalization remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s capital grew organically through partial profit retention in the past years, supported by positive operating results. Despite the COVID-19 pandemic continuing to develop in Taiwan since April 2022, Union’s loss exposures in COVID-related insurance products are expected to be manageable. Based on the latest information available to AM Best, it does not expect COVID-19-related claims will lead to a major capital erosion to Union’s adjusted capital, which includes non-compulsory automobile liability insurance special reserves.

In regard to Union’s operating performance, COVID-19-related claims might add short-term underwriting pressure in 2022. Excluding this one-off event, the company’s adequate operating performance remains supported by a five-year average (2017-2021) return on adjusted capital and surplus of 10.7%. In 2021, while the company’s net combined ratio, excluding compulsory motor business, remained stable, the company’s net loss ratio slightly deteriorated in 2021, mainly attributed to a slightly higher net loss ratio in fire and voluntary motor business. The slightly higher net loss ratio was offset by a slight improvement in the company’s net expense ratio and resulted in a stable overall net combined ratio.

Union is a medium-sized player in the Taiwan non-life insurance market and ranked eighth in 2021 in terms of direct premium written. Similar to other players in the market, the company’s underwriting portfolio is moderately diversified but slightly skewed toward motor business, with other major business lines in fire and accident business. The company maintained a diversified distribution channel mix, with major business contributors in car dealers, direct channel and brokers.

While Union is well-positioned at its current rating levels, negative rating actions could occur if there is a sustained deterioration in the company’s operating performance, or a significant decline in its risk-adjusted capitalisation.

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 AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Paul Lam
Financial Analyst

+852 2827 3402

paul.lam@ambest.com

James Chan
Associate Director

+852 2827 3418

james.chan@ambest.com

Christopher Sharkey
Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Jeff Mango
Managing Director,

Strategy Communications

+1 908 439 2200, ext. 5204

jeffrey.mango@ambest.com

Source: AM Best