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 and manageable foreign exchange risk exposure. The outlook also reflects the likelihood that Chung Kuo Insurance will sustain its market position in commercial lines while exploring deeper into personal line businesses. In addition, we expect the company to be able to improve its underwriting performance through effective business adjustments and reach closer to domestic average combined ratio over the same period. We could lower the ratings on Chung Kuo Insurance if the insurer fails to generate underwriting profit or reach closer to domestic average combined ratio in the

...Chung Kuo Insurance has good competitiveness in Taiwan's commercial insurance market. We expect Chung Kuo Insurance Co. Ltd. to demonstrate good market position in commercial line business, particularly in commercial fire, marine hull, and aviation lines. This strength also represents the sustainability of the insurer's overall credit profile by leveraging the client base and resources of the parent, Mega Financial Holding Co. Ltd. (Mega FHC) group. We expect Chung Kuo Insurance will maintain a supportive financial policy and diversified investment portfolio. The insurer is likely to maintain its good liquidity and satisfactory asset allocation of diversified investment portfolios over the next one to two years. We anticipate the company can sustain its liquidity, which is evidenced through its favorable financial profile. Capitalization is likely to remain a strength. We believe Chung Kuo Insurance will maintain excellent capital adequacy over the next one or two years, signifying the...

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