Taiwan Ratings Corp (中華信評) yesterday affirmed stable ratings on Shin Kong Financial Holding Co’s (新光金控) long-term credit outlook as the group had put up performances in line with the agency’s expectations in recent quarters.
“The ratings reflect the group’s good market franchise in Taiwan’s financial market, strong liquidity and satisfactory financial flexibility,” the local arm of Standard & Poors said in a statement.
Counterbalancing factors include the group’s mediocre capitalization and moderate profitability, the rating agency said.
The ratings further reflected Shin Kong Financial’s subordination to its core operating subsidiaries, including Shin Kong Life Insurance Co (新光人壽) and Shin Kong Commercial Bank (新光銀行).
The life insurer dominates the group’s overall risk factors, while the lender plays an important role in the group’s strategic development in bancassurance business, the rating agency said.
Volatile foreign exchange costs, difficulties promoting high-margin products and a low interest rate environment will continue to constrain the performance of the local life insurance industry, including Shin Kong Life, Taiwan Ratings said.
However, the rating agency considered Shin Kong Life’s market position to be strong given continuous premium growth momentum during the past few quarters, the statement said.