Fitch Ratings has assigned
The rating reflects its moderate company profile and good financial performance, supported by sound capitalisation on a consolidated pro forma basis. The rating also takes into consideration the challenges it faces in further developing its business presence and operating performance as a merged entity against intense market competition.
Key Rating Drivers
Ratings Reflect Parental Support: CLITC’s IFS Rating is driven by the consolidated pro forma financials of
In terms of strategic importance, Fitch evaluates CLITC as a ‘Very Important’ member of Chubb, as it benefits from ownership and strategic linkages with Chubb. Chubb’s acquisition of CTL is complementary to the group’s business expansion strategy in the
Moderate Company Profile: Fitch assesses the consolidated CLITC company profile as ‘Moderate’ compared with that of all other Taiwanese life insurers. It also has a ‘Moderate’ business risk profile, ‘Somewhat Diversified’ business portfolio and ‘Moderate/Favourable’ corporate governance ranking.
Mid-Sized Insurer: Fitch estimates CLITC is the 12th-largest life insurer in
Investment-Linked Business Dominates: CLITC’s pro forma return on equity (ROE) on an annualised basis amounted to 3.8% for 2022. Its pro forma business mix by premium comprises mainly investment-linked (78%), health (13%) and personal accident (7%) products on a consolidated basis. We expect CLITC to be challenged to improve its operational stability and profitability, given its dominant investment-linked business focus, and its newly merged operations amid a highly competitive operating environment.
Healthy Capitalisation: Fitch believes its capital is commensurate with its company profile. The insurer has no exposure to financial debt, with no plans to issue debt in the short term. We expect the company to maintain its regulatory risk-based capital (RBC) ratio with an appropriate buffer well in excess of the regulatory minimum of 200%. CTR’s regulatory RBC ratio was 352% and CTL’s was 733% at
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Change in Fitch’s perception of strategic importance and parental support for CLITC;
A significant deterioration in its profitability, with its ROE consistently falling below 2%;
Persistent weakening in the company profile in terms of business franchise and operating scale.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
A significant strengthening of the company profile, such as a larger operating scale and more diversification in business offerings and distribution channels;
Improvement in operating profitability, with a stable trend in the value of new business margin.
Date of Relevant Committee
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Entity / Debt
Natl Ins Fin Str
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