AM Best Affirms Credit Ratings of Thaire Life Assurance Public Company Limited
AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of "a-" (Excellent) of Thaire Life Assurance Public Company Limited (Thaire Life) (Thailand). The outlook of these Credit Ratings (ratings) is negative.
The ratings reflect Thaire Life's balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Thaire Life's balance sheet strength assessment is underpinned by its risk-adjusted capitalisation that remained at the strongest level at fiscal year-end 2021, as measured by Best's Capital Adequacy Ratio (BCAR). AM Best considers the company to have a moderate risk investment portfolio given its exposure to higher risk asset classes of equities and mutual funds, but this is partially mitigated by a good level of overall portfolio diversification. The company's modest absolute capital base is viewed to have the potential to increase the sensitivity of capital adequacy to shock events, as well as to changes in future performance.
AM Best views Thaire Life's operating performance as strong, albeit the continued negative outlook for the FSR and Long-Term ICR reflects pressure on this assessment. The company has reported a five-year weighted average return-on-equity ratio of 15.2% (2017-2021); however, its underwriting performance has seen a declining trend over the recent years largely due to adverse claims experience in relation to the COVID-19 pandemic and business growth in the less profitable health class of business. In response, the company has taken some remedial actions to improve its claims experience and these actions supported the reporting of an improved operating results during the first half of 2022. Prospectively, AM Best expects that Thaire Life will continue to increase its growth in the health insurance business while executing remedial actions aimed at improving its near-trm profitability. Nonetheless, AM Best notes that challenges remain for the company in executing on this business plan, given the competitive market conditions in Thailand's life and health market.
AM Best considers Thaire Life's business profile to be neutral. The company is the only domestic life reinsurer in Thailand and maintains long-standing relationships with key cedants. In light of challenging market conditions, the company's business growth was constrained in 2019 and 2020. However, the company's gross premium written grew by 25% in 2021, mainly due to the company's expansion of health and group reinsurance products from new treaties along with growth of the health insurance market in Thailand. AM Best expects Thaire Life's future business expansion to be supported by new product development initiatives, strategic business partnerships and distribution channel diversification.
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