SINGAPORE: AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Bangkok Insurance Public Company Limited (BKI) (Thailand). The outlook of these Credit Ratings (ratings) is stable.[the_ad id=”31605″]The ratings reflect BKI’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
BKI’s balance sheet strength assessment is underpinned by risk-adjusted capitalization that remains at the very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR). Capital adequacy is supported by the company’s low net underwriting leverage, albeit partially offset by a high-risk investment portfolio, which includes large and concentrated holdings of domestic equities. While the company has exhibited an elevated dividend payout ratio over recent years, retained earnings have remained robust and sufficient to support business growth. Other balance sheet considerations include the company’s moderate dependence on reinsurance to manage its exposure to catastrophe events, accumulations and large single risks.
AM Best views the company’s operating performance as strong, as evidenced by a five-year average combined ratio of 86.6% and operating ratio of 77.2% (2014-2018). BKI’s underwriting performance has exhibited a high degree of stability over the past five years, as well as comparing favorably with local and regional peers. Prospectively, AM Best expects the company’s operating performance to remain at a strong level, supported by a robust balance of underwriting and investment earnings. AM Best expects the company to continue to exhibit a strong underwriting discipline with a focus on profitable growth.
BKI’s business profile is assessed as neutral. The company is the third-largest non-life insurer in Thailand with direct written premiums of THB 16.7 billion (USD 516 million) in 2018, equivalent to a 7% market share. The company’s portfolio is diversified moderately by line of business; however, almost all business originates from Thailand with a high geographical concentration toward the city of Bangkok.
AM Best considers the company’s ERM framework to be appropriate given the size and complexity of its operations. The company’s risk management capabilities are assessed typically to be adequate for the profile of key risks.