Chung Kuo Insurance Co. Ltd.

The stable rating outlook reflects our view 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 the insurer will retain its market position in commercial lines while exploring deeper into personal line businesses. We believe Chung Kuo Insurance can maintain its underwriting performance through effective business adjustments and trend toward the domestic average combined ratio over the coming two years. Though we view the likelihood as somewhat remote over the next one to two years, we could lower the ratings on Chung Kuo Insurance if: the insurer fails to generate

...Chung Kuo Insurance will likely maintain good competitiveness in Taiwan's commercial insurance market. We anticipate Chung Kuo Insurance Co. Ltd. will retain its competitiveness in the domestic market over the next one to two years, which represents the sustainability of the insurer's overall credit profile through leveraging the client base and resources of the parent, Mega Financial Holding Co. Ltd. (Mega FHC) group. The insurer's supportive financial policy and diversified investment portfolio are sustainable. Chung Kuo Insurance 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 could sustain its liquidity, as evidenced by its favorable financial profile. We assess the insurer's capital as a strength. Our risk-based capital model indicates that Chung Kuo Insurance's capital adequacy is excellent and unlikely to weaken over the coming two years. The insurer's satisfactory...

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