AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of China Taiping Insurance (Singapore) Pte. Ltd. (CTPIS) (Singapore). The outlook of these Credit Ratings (ratings) is stable. CTPIS is a wholly owned subsidiary of China Taiping Insurance Holdings Company Limited, which is ultimately majority owned by China Taiping Insurance Group Ltd. (TPG), a China state-owned financial and insurance group.

The ratings reflect CTPIS’ balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also reflect the lift CTPIS receives due to being part of the TPG group.

CTPIS’ risk-adjusted capitalisation is expected to remain at the strongest level over the intermediate term, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s capital and surplus increased by 44% to SGD 220 million (USD 114 million) as of year-end 2023, compared with one year prior, mainly due to a capital injection from its parent, TPG. Ongoing financial commitment from the TPG group is expected to support CTPIS’ capital adequacy as it develops its life insurance operations over the intermediate term. An offsetting balance sheet strength factor is the company’s moderate reinsurance usage to support the underwriting of large limit risks and endowment plans; however, this risk is partially mitigated by its well-rated reinsurance panel. Additionally, the company’s investment portfolio is focused on cash, deposits and fixed-income securities, albeit with an increasing exposure to higher-risk asset classes such as equities.

The company’s operating performance is assessed as adequate, supported by profitable non-life operations. The company’s pre-tax operating results has been dampened by elevated start-up costs and technical provisions associated with life insurance sales, which commenced in 2018. Investment income has historically been a positive driver of CTPIS’ overall earnings. As of 30 June 2024, CTPIS has recorded an operating profit, mainly due to favourable investment performance and the underwriting profit generated from its non-life business. Whilst CTPIS is expected to exhibit adequate operating performance over the medium term, a level of potential volatility in both underwriting and investment results due to market uncertainties, may dampen earnings over the near term.

AM Best assesses CTPIS’ business profile as neutral. The company is a medium size insurer domiciled in Singapore and has a long-established position within that country’s non-life segment. In addition, CTPIS has a developing profile in its domestic life segment, offering life insurance protection, savings and retirement planning products for high-net-worth individuals. Life insurance operations accounted for approximately half of gross written premium in 2023 and are expected to reduce over the medium term as the company shifts its focus from growth to value generation. The company benefits from its affiliation with the TPG group, which gives it a level of preferential access to insured risks associated with China-based enterprises in the Singapore market.

AM Best considers CTPIS’ ERM to be appropriate for the size and complexity of its current operations. The company’s ERM framework and capabilities have benefited over a number of years from technical support and guidance provided by the TPG group. Nonetheless, AM Best views CTPIS’ developing life operations as presenting heightened execution risk over the medium term.

Despite CTPIS’ operations accounting for a relatively small portion of the TPG group’s revenue and earnings, it is considered important to the group in terms of accessing the Singapore insurance market and growing its overseas business. CTPIS also benefits from implicit and explicit support from group companies that form part of TPG.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

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