AM Best Affirms Credit Ratings of Taiping Reinsurance Company Limited and Its Subsidiary

Rhea-AI Summary

AM Best has affirmed the Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Ratings of 'a' (Excellent) for Taiping Reinsurance Company Limited and its subsidiary, Taiping Reinsurance (China) Company Ltd. The outlook is stable, reflecting the companies' very strong balance sheet strength and adequate operational performance. A new strategic investor, Ageas, has increased consolidated capital by 34% to HKD 12.1 billion, acquiring a 25% stake in TPRe. The company reported negative net earnings in 2020 due to increased impairment losses but showed positive results in early 2021.

Positive

• Affirmation of Financial Strength Rating of A (Excellent) by AM Best.
• Consolidated capital and surplus increased by 34% to HKD 12.1 billion.
• New strategic investor, Ageas, will support overseas expansion and underwriting expertise.

Negative

• Net earnings turned negative in 2020, the first decline in 10 years.
• Increased impairment losses and pressure on underwriting profitability due to competition.

HONG KONG--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” (Excellent) of Taiping Reinsurance Company Limited (TPRe) (Hong Kong) and its wholly owned subsidiary, Taiping Reinsurance (China) Company Ltd. (TPRe China) (China). The outlook of these Credit Ratings (ratings) is stable.

The ratings of TPRe reflect its 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. The ratings also acknowledge the continued implicit and explicit support given by TPRe’s parent company, China Taiping Insurance Holdings Company Limited (CTIH), in terms of capital, investment, risk oversight and shared operational resources.

TPRe’s risk-adjusted capitalisation remained at the strongest level as of year-end 2020, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s consolidated capital and surplus increased by 34% to HKD 12.1 billion, mainly due to a new strategic investor, Ageas Insurance International N.V. (Ageas). Ageas is a wholly-owned subsidiary of ageas SA/NV, which is a publicly traded international insurance group that offers life and non-life insurance products in European and Asian markets. Following the transaction, Ageas owns about a 25% stake of TPRe while CTIH continues to hold the remaining shares. AM Best believes CTIH will maintain its controlling shareholding status in TPRe for the foreseeable future, and will continue to render capital and financial support to TPRe in a timely manner when necessary. Other supportive factors to its balance sheet strength include strong liquidity, and prudent retrocession programmes.

TPRe’s net earnings turned negative in 2020, first time in the past 10 years, mainly dragged by higher impairment losses and increasing pressure on underwriting profitability due to heightened market competition. The company reported positive operating results during the first half of 2021, while the five-year average return-on-equity ratio was 4.6% (2016-2020). TPRe remains focused on Asia and continues to diversify its geographic coverage and product scope in the life and non-life segments. As a new strategic investor, Ageas will also provide additional support to TPRe in overseas expansion, underwriting expertise and corporate governance.

The ratings of TPRe China reflect its strategic importance to TPRe, as well as its high level of integration with, and the explicit support it receives from TPRe. AM Best expects TPRe China to remain a key contributor to TPRe’s consolidated financials.

The company is well-positioned at the current rating level. Negative rating actions could occur if there is a material deteriorating trend in operating performance such that it no longer supports the current adequate assessment. Negative rating actions also could occur if there is a material deterioration in CTIH’s credit profile or if CTIH reduces the level of support it provides to TPRe.

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 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 © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210923005670/en/

Ken Lau

Financial Analyst

+852 2827 3426

ken.lau@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

Jim Peavy

Director, Communications

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Source: AM Best

FAQ

What was the Financial Strength Rating affirmed by AM Best for Taiping Reinsurance Company Limited in 2021?

AM Best affirmed a Financial Strength Rating of A (Excellent) for Taiping Reinsurance Company Limited.

What impact did Ageas have on Taiping Reinsurance's capital?

Ageas's investment increased Taiping Reinsurance's consolidated capital by 34% to HKD 12.1 billion.

What is the current outlook for Taiping Reinsurance's credit ratings?

The outlook for Taiping Reinsurance's credit ratings is stable.

When did Taiping Reinsurance report its first negative net earnings?

Taiping Reinsurance reported negative net earnings in 2020, which was the first decline in 10 years.

How does Taiping Reinsurance's performance compare in 2021?

Taiping Reinsurance reported positive operating results during the first half of 2021.