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AM Best Affirms Credit Ratings of United Overseas Insurance Limited
[May 21, 2020]

AM Best Affirms Credit Ratings of United Overseas Insurance Limited

AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of "aa-" of United Overseas Insurance Limited (UOI) (Singapore). The outlook of these Credit Ratings (ratings) remains stable.

The ratings reflect UOI's balance sheet strength, which AM Best categorises as very strong, as well as its very strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). In addition, the ratings factor in a positive impact from the company's ultimate majority ownership by and importance to United Overseas Bank Limited (UOB).

UOI's balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), which is expected to remain comfortably at the strongest level over the medium term. AM Best expects capital adequacy to remain supported by controlled underwriting growth, a balanced investment strategy and robust internal capital generation. Over the past five years, consistently strong retained earnings have enabled the company to bolster reported shareholders' equity by 34%, reaching SGD 418 million in 2019. A partially offsetting balance sheet factor remains the company's moderate reinsurance usage to enable the underwriting of large limit risks. Despite this, the company maintains long-standing relationships with key reinsurers, as well as the reinsurance panel consisting of well-rated counterparties.

The company has a track record of very strong operating performance, as evidenced by a five-year average combined ratio of 45% and operating ratio of 14% (2015-2019). Excellent underwriting performance has been driven by very favorable loss ratios emanating from the company's targeted underwriting approach and access to affiliated bank channel business from UOB. Technical results in recent years also have benefited from significant inward commissions, reflecting the strong performance of business ceded to reinsurers. Investment income remains favorable, arising from the company's large invested asset base, which also has been a key contributor to overall earnings over many years. A level of volatility in near-term underwriting and invetment results could arise from the COVID-19 environment; however, AM Best does not expect this to drive a material shift in UOI's performance fundamentals over the medium term.

AM Best views UOI's business profile as neutral. UOI holds a strong competitive position in Singapore's non-life market as the insurance subsidiary of UOB. The company's affiliation with its banking parent enables good access to business through the bancassurance channel, as well as a strong brand and reputation to trade upon in other target segments. The company's largest lines of business remain fire and personal accident insurance, based on 2019 gross written premiums. UOI's underwriting portfolio remains focused predominantly in Singapore, with the company expected to approach regional growth cautiously and remain centered on opportunities arising in connection with UOB's regional expansion.

AM Best considers UOI's ERM approach to be appropriate given the size and complexity of its current operations. Risk management capabilities are robust and typically viewed as appropriate, relative to the profile of the company's core risks. Key risks are identified clearly, measured on a frequent basis and managed in conjunction with UOI's Own Risk and Solvency Assessment (ORSA) reporting.

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 media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.

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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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