S&P Raises Taian’s Ratings

July 6, 2007

Standard & Poor’s Ratings Services has raised its insurer financial strength and counterparty credit ratings on Taian Insurance Co. Ltd. of Taiwan to “BBB+” from “BBB’ and assigned a stable outlook.

“The upgrade reflects Taian Insurance’s consistent and satisfactory operating performance; including the likelihood that the company will maintain its satisfactory operating performance while gradually increasing its risk retention,” explained S&P credit analyst Connie Wong. The ratings also reflect the company’s good capitalization. Moderating factors include the company’s aggressive investment profile.

S&P said that “Taian Insurance’s underwriting performance is satisfactory compared with its peers’. The company’s combined ratio averaged about 96 percent and its return on revenue averaged about 11 percent over 2002-2006.

“Contributing factors were a lack of major catastrophes and the company’s prudent underwriting discipline. Although Taian Insurance’s expense ratio averaged 43 percent during the same period–which was above the industry average–the ratio is likely to decline because of the company’s growing business scale, as measured by its net premium base. The company’s expense ratio declined to about 41 percent in 2006 from a high of about 47 percent in 2003.”

S&P also described Taian Insurance’s capitalization as “good relative to risks written. The company’s solvency ratio (equity to net premium income) stood at 102 percent in 2006. Adequate reserves and reinsurance protection support its capitalization. Taian Insurance’s retention ratio increased to about 54 percent in 2006 from 47 percent in 2005, mainly because of the company’s strategic shift toward retaining more of its profitable business, especially personal lines.”

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