AM Best Revises Outlooks to Stable; Affirms Credit Ratings of Fubon Insurance Co., Ltd.

Business Wire

HONG KONG--(BUSINESS WIRE)--
AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Fubon Insurance Co., Ltd. (Fubon Insurance) (Taiwan).

These Credit Ratings (ratings) reflect Fubon Insurance’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management. The ratings also reflect the support that the company receives from its ultimate parent, Fubon Financial Holding Co., Ltd. (Fubon Financial Holding).

The revision of the rating outlooks to stable from negative reflects AM Best’s view that the potential downward pressure on Fubon Insurance’s balance sheet strength fundamentals has diminished, owing to a substantial reduction in reinsurance recoverables from pandemic insurance claims. The gross outstanding balance has significantly decreased since the fourth quarter of 2024 while the company has booked partial bad debt provisions to reflect the overdue amounts. This exposure remains sizeable relative to the company’s capital position, which is equivalent to 17% of the consolidated reported capital and surplus as of the 30 September 2025. However, the negative pressure on balance sheet strength fundamentals is partially mitigated by the internal capital generation through organic profit accumulation.

The revision of the balance sheet strength assessment to strong from adequate is evidenced by the improvement in Fubon Insurance’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which improved from the weak level at year-end 2023, to the adequate level at year-end 2024. The company’s BCAR is projected to improve to the very strong level at the end of 2025, based on its financial information and AM Best’s assumptions. Fubon Insurance’s consolidated reported capital and surplus achieved double-digit growth in 2024 and through the first three quarters of 2025, reaching TWD 26.4 billion. Notwithstanding, the company’s capital position is unlikely to recover to pre-COVID-19 pandemic levels over the short to intermediate term. Uncertainty in the deferred tax assets amortisation schedule and the collectability of the aforementioned outstanding reinsurance recoverables continue to generate volatility for the company’s risk-adjusted capitalisation.

Fubon Insurance achieved a turnaround in its full-year 2024 financial results, delivering a net profit after tax of TWD 3.0 billion, driven by steady underwriting and investment performance, despite further bad debt provisions. AM Best views the pandemic insurance loss as a one-off event and Fubon Insurance should be able to continue being profitable going forward via the traditionally profitable insurance underwriting and investment results.

Fubon Insurance maintains its market-leading position in Taiwan’s non-life industry, with a market share of 24.4% during the first half of 2025, in terms of direct premiums written. The company continues to leverage the business network of its parent group in sourcing business, while maintaining a moderately diversified underwriting portfolio in terms of products.

Fubon Financial Holding is the second-largest listed financial holding company in Taiwan based on total assets. Fubon Insurance plays a strategic role in the group’s financial platform and receives long-term operating and capital commitments from Fubon Financial Holding, as evidenced by two rounds of capital injections during the pandemic. The lift assessment reflects AM Best’s expectation that the parent will remain committed to providing additional financial support to Fubon Insurance in a timely manner to bolster its balance sheet strength, if needed as per the domestic Financial Holding Company Act.

Negative rating actions could occur if Fubon Insurance executes an excessive dividend payout plan to the parent company, resulting in a slower speed of internal capital generation, along with the increasing risk exposure, which may further weaken the company’s risk-adjusted capitalisation. Negative rating actions also could occur if there is a substantial deterioration in Fubon Insurance’s balance sheet strength fundamentals, for example, due to unexpected large underwriting or investment losses, and without timely support from its parent company. In addition, a material deterioration in the credit profile of Fubon Financial Holding, or its level of support to Fubon Insurance could pose a negative impact on the company’s ratings. Positive rating actions could arise if there is a material and sustained improvement in Fubon Insurance’s 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.