The ratings reflect CTIM’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
CTIM’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), remained stable and is at the strongest level as of year-end 2021. The company’s capital level remained robust at the similar level in 2022, and its investment strategy remained conservative and stable, with the majority of its investment assets in cash and investment grade bonds. The company’s reinsurance program remained comprehensive with reinsurer panels of good credit quality; notwithstanding, the reinsurance dependency of the company is moderate.
CTIM delivered a five-year average return on equity of 18.7% during 2017 to 2021, based on audited financials. The company continues to be profit generating in 2022, supported by positive underwriting results, and partially offset by unfavorable investment results. The company’s net combined ratio improved to 71% in 2022 from 82% in 2021, while the ratio is expected to normalize as the local economy recovers from the COVID-19 pandemic. On the other hand, the net expense ratio exhibits an increasing trend, attributed to growing management expenses spent on IT systems. The company’s investment results turned negative in 2022 due to market volatility but are expected to continue to support the company’s overall operating performance through stable streams of interest, dividend and rental income in the future.
CTIM maintains a long track record as the leader in Macau’s non-life insurance segment and has a market share of close to 34% in 2022 based on gross premium written. The company’s underwriting portfolio and distribution channel were stable and diversified, while the company continues to develop its online channel and explore cross-selling opportunities in its affiliated life insurance company in Macau, China Taiping Life Insurance (Macau) Company Limited.
CTIM is well-positioned at its current rating level. Negative rating actions could occur if there is a material decline in the company’s risk-adjusted capitalisation or a significant and sustained deteriorating trend in its operating performance. A weakening credit profile of the parent company, China Taiping Insurance Holdings Company Limited, also may have a negative impact on CTIM’s ratings.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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