Fubon Life outlook from negative to stable: Moody's
July 6, 2014, 12:09 am TWN
TAIPEI--Moody's Investors Services has revised its outlook for Fubon Life Insurance Co., the insurance flagship entity of Taiwan's Fubon Financial Holding Co, to stable from negative due to the insurer's improving bottom line.
Moody's has left the outlook for Fubon Financial unchanged at stable. The ratings agency has maintained Fubon Life's A3 insurance financial strength (IFS) rating and Fubon Financial's Baa1 issuer rating.
"The revision of the outlook on Fubon Life reflects its improved profitability, given the lower cost of liabilities and increase in investment yield," Moody's analyst Stella Ng said in a statement, referring to a higher return on capital (ROC).
According to Moody's, Fubon Life's ROC rose to 11.2 percent at the end of last year from the 8.6 percent recorded at the end of 2012 due to an increase in the realized gains on financial assets.
The ratings agency said Fubon Life's mortality and morbidity gains have stayed solid as business has grown, while the insurer's investment spread has been on the upswing due to a decline in costs of liability from increased sales of interest-sensitive products and a rise in recurring investment returns.
As of the end of 2013, Fubon Life's total assets topped NT$2.4 trillion (US$80.26 million) and its net worth reached NT$133.8 billion. Last year, the insurer posted NT$19.15 billion in net profit, a record high, up 49 percent from a year earlier.
Moody's said the decision to maintain Fubon Life's A3 IFS rating reflected its well-positioned business profile, adding the insurer is able to maintain a good franchise with a stable domestic presence as the second largest life insurance company in terms of total premiums.
At the end of last year, Fubon Life's first year premiums (FYP) totaled NT$212.8 billion, accounting for 19 percent of the total FYP in the local life insurance market. Fubon Life's embedded value (EV) as of the end of 2013 rose 36 percent from a year earlier to NT$295.7 billion, with an EV per share of NT$81.
Meanwhile, Moody's said the move to maintain Fubon Financial's Baa1 issuer rating reflected the company's financial flexibility as well as the stable credit profile of Fubon Life, the largest subsidiary of the financial holding company.