HONG KONG–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Cathay Century Insurance Company Limited (Cathay Century) (Taiwan). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Cathay Century’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Cathay Century posted double-digit growth in consolidated adjusted capital and surplus (C&S) of TWD 18.4 billion at year-end 2024, buoyed by the net profit derived from underwriting and investment results. While Cathay Century’s consolidated adjusted C&S declined moderately due to an unrealised capital loss in other comprehensive income and a dividend payout during the first half of 2025, AM Best expects the company’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), to remain at a robust level over the short to intermediate term, supported by organic growth in retained earnings from controlled expansion in underwriting and investment risks. Other supportive factors of the balance sheet strength assessment include the company’s diversified investment portfolio, which focuses on low-risk fixed-income securities, good liquidity, comprehensive reinsurance arrangements and the strong financial flexibility afforded by the ultimate parent, Cathay Financial Holding Co., Ltd. (Cathay Financial Holding).
Cathay Century reported a net profit of TWD 2.6 billion in 2024, and maintained that good momentum into the first half of 2025, underpinned by the favourable technical results from the underwriting portfolio and positive investment returns. The company continued to deliver a double-digit increase in gross premiums written in 2024, with a net loss ratio that improved to 55.9%, which was normalised to the pre-COVID-19 level, while the expense ratio saw an uptick to 38.2% due to higher management expenses. Notwithstanding, Cathay Century’s expense ratio benefits from the sizeable underwriting book and better economies of scale. In particular, Cathay Century’s major business line of voluntary motor has contributed to a sustained underwriting margin, owing to its continued efforts to be risk-selective and gradually refine the composition of its business, coupled with rate adjustments.
Cathay Century remains the second-largest insurer in Taiwan’s non-life sector, with a market share of 13.6% in terms of direct premiums written (DPW) in 2024. The company’s underwriting portfolio is diversified moderately with motor being a major line of business, accounting for half of the company’s DPW, followed by fire, accident and health businesses. The portfolio is skewed toward personal lines insurance products. Cathay Century continues to leverage the comprehensive business network of Cathay Financial Holding’s group and affiliated distribution channels to expand its underwriting portfolio. In addition, the company has refined and strengthened its risk management by reviewing product design and underwriting control on a regular basis, while benefiting from the oversight support and resources provided by its parent.
Negative rating actions could occur if there is a substantial deterioration in Cathay Century’s balance sheet strength assessment, for example, due to unexpected large underwriting or investment losses and/or without timely capital support from Cathay Financial Holding. A deterioration in the parent’s credit profile, or a diminished level of parental support also may pose a negative impact on Cathay Century’s ratings.
Although the likelihood is relatively low, positive rating actions could occur if Cathay Century achieves sustained improvement and stability in its operating performance while maintaining its current balance sheet strength assessment level. An improvement in Cathay Financial Holding’s credit profile, or an enhanced level of parental support also may have a positive impact on Cathay Century’s ratings.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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Contacts
Stephanie Mi
Senior Financial Analyst
+852 2827 3402
[email protected]
James Chan
Director, Analytics
+852 2827 3418
[email protected]
Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310
[email protected]
Al Slavin
Senior Public Relations Specialist
+1 908 882 2318
[email protected]
