Bangkok--29 Jul--Fitch Ratings
Fitch Ratings has today affirmed Muang Thai Life Assurance Company Limited (MTL)’s Insurer Financial Strength (IFS) rating at ‘BBB+’ and a National IFS rating at ‘AA(tha)’. The Outlook remains Stable.
The ratings reflect MTL’s strong market positioning in the domestic market, conservative management, prudent capitalisation, diversified distribution channels as well as good financial performance. On the other hand, the company faces challenges in properly managing its asset liability duration matching, and in maintaining its good operating performance under current market conditions.
Amidst intensive market competition, MTL managed to improve its market share in the local market, based on total premiums, to 7.8% in 2008 from 6.8% in 2007, thereby becoming the third-largest life insurance company in Thailand. Its financial performance has been consistently healthy, with an average ROE of 19.3% for the past three years. Kasikornbank Public Company Limited (KBank, Long Term foreign currency Issuer Default Rating at ‘BBB+’/Negative Outlook and National Long-term rating at ‘AA(tha)’/Stable Outlook), will increase its indirect economic interest in MTL to 38.3% from 7.5% during 2009 through MTL’s holding company, MuangThaiFortis Holding Company (MTFH). KBank will increase its shareholding in MTFH to 51% from 10%. MTL is 75%-owned by MTFH. MTL will be able to further tap into KBank’s customer base as well as utilise more efficiently bancassurance as a distribution channel.
The agency views that the company's capital position is healthy and of very good quality, which consists entirely of ordinary equity and retained profits with no debt issuance. MTL's prudent capitalisation is significantly above the local regulatory requirements, and internally benchmarked against European regulatory standards. Its local solvency margin position was above 600% at end December 2008, which is significantly higher than the local statutory minimum level of 100%.
As with other Asia life insurers, MTL also faces asset-liability management issues in a relatively undeveloped local fixed-income market. The maturity gap between assets and liabilities remains high although this has gradually improved over the years with MTL's active management of its investment portfolio. Additionally, MTL is challenged to maintain its profitability in a less benign operating and business environment with intensive market competition.
MTL, established in 1951, ranks as the third-largest insurer in Thailand based on total premiums. Gross written premiums for 2008 amounted to THB17bn.
Contacts: Narumol Charnchanavivat, Bangkok +662 655 4763; Wan Siew Wai, Singapore, +65 6796 7217; Vincent Milton, Bangkok, +662 655 4759
Disclosure: Muang Thai Life Assurance Company Limited owns 10% of the shares in Fitch Ratings (Thailand) Limited. No shareholder, other than Fitch Rating Limited of the UK, is involved in the day-to-day operation of, or credit rating reviews undertaken by, Fitch Ratings (Thailand) Limited.
Note: National IFS Ratings provide an assessment of relative financial strength to the insurance company’s policyholder obligations. National IFS Ratings assess the ability of an insurer to meet policyholder and related obligations, relative to the best credit risk in a given country across all industries and obligation types. National IFS ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National IFS ratings in Thailand. Specific letter grades are not therefore internationally comparable.
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