Chung Kuo Insurance Co. Ltd.

The stable rating outlook reflects our view that Chung Kuo Insurance will maintain its very strong financial risk profile over the next one to two years, as well as maintain a prudent investment strategy and manageable foreign exchange risk exposure. We believe the potential losses from claims on its pandemic insurance policies are absorbable with the support of capital injections from the parent group. The company's underwriting performance will gradually restore to about the pre-COVID level over the next two to three years. We could lower the ratings on Chung Kuo Insurance if: We lower our assessment of the insurer's capital and earnings, which could result from higher losses from pandemic insurance than we currently expect without a sufficient capital

...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, given our view of 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. The insurer's capitalization will remain a strength to absorb sizeable losses on its pandemic insurance policies. We believe Chung Kuo Insurance's capitalization will remain excellent over the next two to three years with strong commitment from its parent group to inject capital and support its capital needs. These factors will help the insurer to absorb substantial claim losses on its COVID-19 insurance policies sold in the first half of 2022. Supportive financial policy and diversified investment portfolio are sustainable. Chung Kuo Insurance is likely to maintain its good...

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