The ratings on Cathay Life Insurance Co. Ltd. reflect our view of the insurer's strong business risk profile (BRP) and upper-adequate financial risk profile (FRP), which in turn reflect the company's extremely strong competitive position and lower-adequate capital and earnings. Overall, Cathay Life faces moderate industry and country risk due to its primary operations in Taiwan, where structural weaknesses in asset and liability mismatch expose the insurer to balance sheet volatilities. In addition, a persistent low-yield environment pressures industry-wide earnings, including Cathay Life's, and has resulted in an industry-wide problem of negative spread (where average policy costs outweigh average investment yields). Nonetheless, we believe that Taiwan's ample financial market liquidity and the low level of average protection support adequate growth
