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Fitch Affirms Thai Life Insurance at 'BBB+'; Outlook Stable
February 3, 2017 / 8:26 AM / 6 months ago

Fitch Affirms Thai Life Insurance at 'BBB+'; Outlook Stable

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(The following statement was released by the rating agency) BANGKOK/SINGAPORE, February 03 (Fitch) Fitch Ratings has affirmed Thai Life Insurance Public Company Limited's (TLI) International and National Insurer Financial Strength (IFS) ratings at 'BBB+' and 'AAA(tha)', respectively; the Outlook is Stable. KEY RATING DRIVERS The ratings reflect TLI's sound financial performance, prudent pricing policy, market-comparable growth in premium revenues, an expanding franchise, consistent investment returns and its strong capital position. In addition, Fitch believes Meiji Yusuda Life Insurance Company (MYL, IFS: A/Negative), through its 15% stake in TLI, could provide the company with technical and operational support, and enhance its access to MYL's Japanese customers in Thailand. TLI maintains its position as the third-largest life insurer in Thailand by total premiums, with a 14.1% market share at end-3Q16. This solid market stance is supported by a long-established franchise and extensive agency network nationwide. As such, TLI's agent forces represented 76% of its total premiums and recorded as the second-largest market share in Thailand in terms of premiums written through an agency channel at end-3Q16. TLI's robust capitalisation had been reflected by its risk-based capital ratio (RBC) at 376% and 313% by end-2015 and end-3Q16, respectively, well above the regulatory minimum of 140%. Prism Factor-Based Capital Model's score had dropped one level to 'Very Strong' using its end-3Q16 result, due to higher insurance liabilities that resulted from a low-yield environment and more investment in equities and corporate bonds. Fitch believes TLI's full-year 2016 results will place it in the 'Very Strong' range, supported by its sound business performance. TLI's invested asset allocation is liquid; with fixed-income securities, cash and deposits representing the majority about 82% of invested assets at end-3Q16. Exposure to equities increased from the previous year but was limited at around 10% of the portfolio in the corresponding period. Fitch believes TLI will maintain its prudent investment strategy and balance its investment returns and risks under the current low-interest-rate environment. Fitch expects TLI's financial performance remains sound with its vigilant pricing policy, and consistent investment incomes. The company's three-year (2013-2015) average pre-tax ROA of 2.4% is comparable with that of its peers. Its gross premiums written rose moderately at about 10% (annualised) by end-3Q16, higher than an industry's growth of 7% in 2016 as forecasted by Thai Life Assurance Association. RATING SENSITIVITIES Key triggers for a downgrade include a drop in TLI's RBC ratio to below 250% for an extended period, and deterioration in profitability as reflected by a pre-tax ROA that stays below 1%. In addition, a weaken score under the Prism FBM could be a catalyst for negative rating action. If Thailand's Long-Term Local Currency IDR of 'BBB+' with a Stable Outlook were downgraded, Fitch is likely to lower TLI's IFS rating. An upgrade is unlikely in the near term as TLI's International IFS rating is at the same level as Thailand's Long-Term Local-Currency IDR. TLI's National IFS is already at the highest possible level. Contact: Primary Analyst Siew Wai Wan (International rating) Senior Director +65 6796 7217 Fitch Ratings Singapore Pte Ltd One Raffle Quay, South Tower #22-11 Singapore 048583 Thanasit Utamaphethai (National rating) Associate Director +662 108 0154 Fitch Ratings (Thailand) Limited Park Ventures, Level 17 57 Wireless Road, Lumpini, Patumwan Bangkok 10330 Secondary Analyst Thanasit Utamaphethai (International rating) Associate Director +662 108 0154 Siew Wai Wan (National rating) Senior Director +65 6796 7217 Committee Chairperson Jeffrey Liew Senior Director +852 2263 9939 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Disclosure: Thai Life Insurance Public Company Limited has a 10% equity stake in Fitch Ratings (Thailand) Ltd. No shareholder other than Fitch Ratings Limited is involved in the day-to-day rating operations of, or credit rating reviews undertaken by, Fitch Ratings (Thailand) Ltd. Note to Editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(tha)' for National ratings in Thailand. Specific letter grades are not therefore internationally comparable. Additional information is available at www.fitchratings.com. Applicable Criteria Insurance Rating Methodology (pub. 15 Sep 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1018545 Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. 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As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. 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