Fitch Ratings say that it ranks the company profile of Cathay Life and Fubon Life as 'Most Favourable' among several life insurers in a peer review. The other insurers in the peer review have a 'Favourable' company profile.
The rankings reflect the insurers’ strong market franchise, large operating scales, well-diversified product lines, and distribution channels, says Fitch.
The insurers in the peer review are Cathay Life, Fubon Life, KGI Life, Nan Shan Life and Taiwan Life.
Satisfactory capital positions
All members of the peer group have Fitch Prism Model scores of ‘Adequate’ to 'Strong'. Some members have reclassified part of their assets measured at fair value through other comprehensive income to assets measured at amortised costs, to reduce volatility in capitalisation resulting from interest-rate movements. Their regulatory risk-based capital ratios remained well above the minimum requirement of 200%.
The localised Insurance Capital Standard (TW-ICS) will be rolled out in 2026 alongside the adoption of IFRS 17. The Financial Supervisory Commission's (FSC) transitional measures over a 15-year phase-in period aimed to give insurers more time to adjust their asset allocations and narrow potential capital gaps.
Ongoing debt issuance
Fitch expects the life insurers to continue to issue either onshore or offshore bonds, which count towards capital, to supplement and strengthen their regulatory capital adequacy ratio under TW-ICS. Fitch believes the insurers will benefit from the FSC’s widening of funding sources, allowing them to issue capital-qualified subordinated bonds by setting up SPVs overseas.