HONG KONG–(BUSINESS WIRE)–AM Best revised its market segment outlook from negative to stable for Taiwan’s non-life segment, citing a resurgence of COVID-19 that led to significant losses on pandemic-related insurance policies. .
in a new Best Market Segment Report, “Market Segment Outlook: Taiwan Non-Life Insurance”, AM Best notes that the ultimate losses for Taiwan’s non-life industry remain highly uncertain and subject to infection rate and potential changes in government policy; the impacts on businesses vary depending on their pandemic insurance risks and policy expiration patterns. The spike in COVID-19 has led to a momentous event for some companies, while others face a fiscal 2022 earnings event. (Please see Comment by Best“The spike in pandemic-related claims in Taiwan could create a momentous event for some non-life insurers. »
“AM Best expects total pandemic policy claims to continue to rise and put significant pressure on non-life underwriting performance for the full year 2022,” said James Chan, managing partner. by AM Best. “However, in the medium term, insurers that have been less affected are likely to recoup these losses on their traditional non-pandemic underwriting portfolios, which have a track record of favorable underwriting results.”
The prolonged low interest rate environment in Taiwan, as well as heightened capital market volatility in the first half of 2022, also continues to challenge non-life insurers. The local stock index is down nearly 20% in the first six months of 2022, creating volatility in carrier capitalization and operating results through capital gains and losses. After appreciating against the US dollar over the past three years, the Taiwanese dollar has depreciated 8% year-to-date to July 31.
AM Best expects the market to maintain its focus on profitability and achieve operating margins for non-pandemic lines of business in 2022 similar to levels before the surge in COVID-19 infections.
“Many insurers could face capital erosion pressure where their regulatory solvency ratios could fall below the 200% minimum requirement in the near term,” said Christie Lee, senior director, analytics, AM Best. “However, these insurers usually have either parent financial holding companies or large financially strong shareholders to support them during the current difficult period.”
To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=323194.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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