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A.M. Best Assigns Ratings to China Taiping Insurance (UK) Company Limited

February 28, 2014



ENP Newswire - 28 February 2014

Release date- 27022014 - A.M. Best has assigned a financial strength rating of B++ (Good) and an issuer credit rating of 'bbb' to China Taiping Insurance (UK) Company Limited (CTIUK) (United Kingdom).

The outlook assigned to both ratings is stable.

The ratings reflect CTIUK's improving operating performance and good risk-adjusted capitalisation. The ratings also take into account the company's niche business profile and strong links with its ultimate parent, state-owned China Taiping Insurance Group Ltd. (China Taiping) (China).

CTIUK is a niche insurer catering predominantly to the needs of the Chinese communities established in the United Kingdom and a select number of other European countries. The company mainly operates in the retail market, targeting restaurants, takeaway outlets and shops. However, it has been diversifying its business profile by writing more commercial combined policies in 2013. In addition to this, CTIUK's recent acquisition of several new broker partners should bolster premium growth in 2014. While CTIUK only accounts for a small proportion of China Taiping's consolidated revenue, it benefits from the group's brand recognition as well as investment and reinsurance support.

Despite CTIUK's volatile earnings in the past, its profit before tax has improved in the last couple of years. This was driven by a more stable underwriting performance following the cancellation of loss-making professional indemnity business and recovering investment results. Going forward, the company is targeting a profit in the range of GBP 1.5-2 million per year, but profit margins are expected to remain constrained by high acquisition expenses.

CTIUK's risk-adjusted capitalisation has been improving in recent years as a result of lower exposure to equity investments, relatively stable net written premium and increasing retained earnings. Going forward, the balance sheet strength is expected to remain supportive of the current ratings, despite the strong premium growth anticipated in 2014.

Positive rating actions could occur for CTIUK if, over the next few years, it consistently improves its underwriting results while maintaining adequate risk-adjusted capitalisation. Negative rating actions could occur as a result of excessive growth leading to a significant deterioration of earnings or risk-adjusted capitalisation.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: www3.ambest.com/emea/ambersdisclosure.pdf.

This rating announcement has been issued by A.M. Best Europe - Rating Services Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

A.M. Best's credit ratings are independent and objective opinions, not statements of fact. A.M. Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. A.M. Best's credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

A.M. Best receives compensation for interactive rating services provided to organizations that it rates. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services. For more information regarding A.M. Best's rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the A.M. Best Code of Conduct.

A.M. Best - European Rating Services Limited (AMBERS), a subsidiary of A.M. Best Company, is an External Credit Assessment Institutions (ECAI) in the European Union (EU). Therefore, credit ratings issued by AMBERS may be used for regulatory purposes in the EU as per Directive 2006/48/EC.


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Source: ENP Newswire


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