Chung Kuo Insurance Co. Ltd.

The stable outlook reflects our expectation that Chung Kuo Insurance will maintain its very strong capital and earnings over the coming one to two years as well as a prudent investment strategy. The outlook also reflects the likelihood that the insurer will uphold its market position in commercial lines while also making market share gains in its personal line business. However, these efforts could take some time to lift the insurer's business performance, given fierce competition. We could lower the ratings on Chung Kuo Insurance if we lowered our assessment of the insurer's capital and earnings to strong from very strong currently, mainly due to weakened capitalization. This could result from large losses by the insurer, particularly from its commercial

...Chung Kuo Insurance has good competitiveness in Taiwan's commercial insurance market. We expect Chung Kuo Insurance Co. Ltd. to sustain its expertise in commercial line business, particularly in commercial fire, marine hull, and aviation lines. This strength also complement its parent Mega Financial Holding Co. Ltd. (Mega FHC) group's strong footing in corporate lending business. We expect the insurer's operating performance to be about the domestic norm. We expect Chung Kuo Insurance's operating performance to remain satisfactory over the coming two years, underpinned by its prudent underwriting control and also good business referral from its parent group. The insurer's good underwriting performance in Guam also underpins its stable profitability. Capitalization is likely to remain a strength. We assess Chung Kuo Insurance's capital will remain excellent over the coming two years based on our risk-based capital model. This is supported by the insurer's satisfactory operating performance...

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