AM BEST UPGRADES HOTAI INSURANCE CREDIT RATINGS

KUALA LUMPUR, Jan 21 (Bernama) -- Global credit rating agency, AM Best has upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to ‘a’ (Excellent) from ‘a-’ (Excellent) of Hotai Insurance Co Ltd (Hotai Insurance) Taiwan.

The outlook of these Credit Ratings (ratings) has been revised to stable from positive, according to a statement.

The ratings reflect Hotai Insurance’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. The ratings also reflect the support that the company receives from its ultimate parent, Ho Tai Motor Co Ltd (Ho Tai Motor).

The rating upgrades reflect the revision of Hotai Insurance’s operating performance assessment from marginal to adequate, with the company acquired in early 2017 by its parent group, Ho Tai Motor, and turning around its underwriting performance to deliver stable underwriting profits since 2018 with lowered expense and combined ratios.

Hotai Insurance reported an improved return-on-equity (ROE) ratio over the past three years, with 2020 ROE recorded at 7.9 per cent, which supported an adequate operating performance assessment. Going forward, AM Best expects the company’s underwriting performance to continue aligning with the industry average, while its bottom line will be highly dependent on its investment performance.

Hotai Insurance’s balance sheet strength is supported by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Invested assets remain highly liquid, but the company moderately increased its investment allocation to higher risk assets in recent years to enhance yields.

AM Best expects the company’s risk-adjusted capitalisation to remain supportive of its very strong balance sheet strength assessment, underpinned by the strengthened capital base through full retention of earnings over the past five years.

Motor insurance represents approximately 60 per cent of Hotai Insurance’s underwriting book, which is higher than the industry average, as a result of its parent’s support.

Over the short to intermediate term, AM Best expects that Ho Tai Motor’s fundamentals will remain stable and its support rendered to Hotai Insurance will remain strong.

For more information, visit www.ambest.com.

-- BERNAMA