SINGAPORE–(BUSINESS WIRE)–AM Best has downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating to �bbb+ (Good) from a- (Excellent) of Bangkok Insurance Public Company Limited (Thailand) (BKI). The outlook of these Credit Ratings (ratings) has been revised to stable from negative.
The ratings reflect BKIs 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 (ERM).
The rating downgrades reflect a deterioration in AM Bests view of BKIs operating performance fundamentals. In 2021, the company reported a marked increase in its combined ratio to 102% from 87% as its loss ratio rose to 72% from 56%. In 2021, BKIs underwriting performance was impacted by a high frequency of claims relating to COVID-19 health policies covering lump-sum payment product in particular, although this experience was offset partially by the companys strong performance in its core lines of business such as motor, industrial all risks, and fire insurance. AM Best expects BKIs combined ratio to remain elevated at least over the near term, resulting in a weakening of the companys overall earnings.
BKIs risk-adjusted capitalisation, as measured by Bests Capital Adequacy Ratio (BCAR), remained at the strongest level at year-end 2021, albeit it declined moderately as compared with the prior-year result. While the company is dependent on reinsurance to support the underwriting of large and complex risks, its reinsurance panel is of high credit quality and well-diversified. However, BKIs balance sheet remains exposed to high market risk given the companys significant investment allocation to a few equity holdings, which has resulted in some volatility in the companys capital and surplus over the past five years.
BKI is the third-largest non-life insurer in Thailand in terms of direct premium written, with an approximately 8.6% share of the market in 2021. The company benefits from a strong brand name that has been built over its long operating history and good market penetration. In terms of business mix, the companys underwriting portfolio is dominated by motor and commercial risks.
AM Best considers the companys ERM framework overall to be appropriate given the size and complexity of its operations. The company assumed excessive product risk through writing lump-sum COVID-19 policies resulting in a significant negative financial impact. BKI has ceased offering such policies since June 2021, limiting further negative development. In addition, all the lump-sum COVID-19 policies are expected to expire in the second quarter of 2022.
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 Bests 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 Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Bests Credit Ratings. For information on the proper use of Bests Credit Ratings, Bests Performance Assessments, Bests Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Bests Ratings & Assessments.
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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Contacts
Trung Tran
Senior Financial Analyst
+65 6303 5019
trung.tran@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Kanika Thukral
Senior Financial Analyst
+65 6303 5025
kanika.thukral@ambest.com
Jeff Mango
Managing Director,
Strategy & Communications
+1 908 439 2200, ext. 5204
jeffrey.mango@ambest.com
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