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 a prudent investment strategy and manageable foreign exchange (forex) risk exposure. We believe the insurer will gradually restore its underwriting performance to the pre-pandemic level over the next two to three years. In addition, we believe the parent group will continue to support the insurer's capital adequacy should Chung Kuo Insurance encounter major losses. We could lower the ratings on Chung Kuo Insurance if: The insurer's capital and earnings deteriorate substantially from the current very strong level. This could result from higher losses from underwriting or reinsurance recoveries than we forecast,

...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, through leveraging the insurer's diversified business channels and the client base and resources of the parent, Mega Financial Holding Co. Ltd. (Mega FHC) group. The insurer's capitalization will remain a strength with potential group support. We forecast Chung Kuo Insurance's capitalization will remain sufficient at an extreme stress scenario (99.99% confidence level) in 2024-2025. This view is supported by the insurer's prudent financial management and the likelihood of capital support from the parent group. Under our base case, we believe Chung Kuo Insurance will be able to manage the potential credit provisions for its reinsurance receivables and sustain its capital strength, given the financial support from the group. Underwriting performance could rebound...

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