Fitch Assigns Thai Life Insurance IFS Rating of 'A-'/Stable

Sun Aug 24, 2014 11:22pm EDT

(The following statement was released by the rating agency) BANGKOK/SINGAPORE, August 24 (Fitch) Fitch Ratings has assigned Thai Life Insurance Public Company Limited (TLI) International and National Insurer Financial Strength (IFS) ratings of 'A-' and 'AAA(tha)', respectively. The Outlook is Stable. KEY RATING DRIVERS The International IFS and National IFS ratings reflect TLI's sound financial performance, solid market franchise, and conservative investment portfolio. The company also has strong capitalisation to support growth and act as a buffer against downside risks. TLI's focus on high margin products is reflected in the company's sound profitability with an average pre-tax return on assets of 2.5% during 2009-2013. TLI recorded pre-tax return on assets at 2.2% in 2013 (2.6% in 2012). TLI is the third-largest life insurer in Thailand by total premiums written with 12.4% market share in 2013. The company has been operating for more than 70 years and has 311 branches countrywide as at end-2013. TLI has almost 65,000 tied agents countrywide, the second-largest agency network in the country, of which nearly 30,000 are active agents. Fixed-income securities, cash and deposits made up about 87% of TLI's invested assets at end-2013. The company allocated less than 5% of its invested assets to equities. Fitch believes TLI's investment portfolio will remain conservative, dominated by good-quality fixed-income securities. TLI's strong capitalisation is supported by consistent healthy profitability and high retained earnings. TLI's risk-based capital (RBC) ratio was at 478% at end-March 2014, materially higher than the 360% a year earlier and well above the minimum regulatory requirement of 140%. Fitch expects a partnership with Meiji Yasuda Life Insurance Company (Meiji Yasuda Life; IFS: A+/Negative) to benefit TLI in terms of risk management and sales and product capabilities. Meiji Yasuda Life acquired 15% of TLI in 2013 to increase its presence outside of Japan. The agency believes TLI has no plan to further alter its ownership structure in the medium term. RATING SENSITIVITIES Key rating triggers for a downgrade include a material decline in its capital buffer that can be seen in its risk-based-capital ratio dropping below 250% for an extended period, and a sustained weakening in profitability that is reflected in pre-tax return on assets sustained below 1%, especially as a result of the company shifting focus to lower margin products. If Thailand's Long-Term Local Currency Issuer Default Rating (IDR) of 'A-' with Stable Outlook is downgraded, the IFS rating on the insurer is also likely to be lowered. 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 Analysts Siew Wai Wan (International rating) Senior Director +65 6796 7217 Fitch Ratings Singapore Pte Ltd 6 Temasek Boulevard #35-05 Suntec Tower Four Singapore 038986 Trin Siriwutiset (National rating) Associate Director +662 108 0154 Fitch Ratings (Thailand) Limited 57 Wireless Road Lumpini, Patumwan Bangkok 10330 Secondary Analysts Trin Siriwutiset (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 Company Limited owns 10% of the shares in Fitch Ratings (Thailand) Limited. No shareholder, other than Fitch Ratings Limited of the UK, is involved in the day-to-day operations of, or credit rating reviews undertaken by Fitch Ratings (Thailand) Limited. 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", dated 13 November 2013, and "National Scale Ratings Criteria", dated 30 October 2013 are available on www.fitchratings.com Applicable Criteria and Related Research: Insurance Rating Methodology here National Scale Ratings Criteria here Additional Disclosure Solicitation Status 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 WEBSITE '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. 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