Bangkok Insurance Public Co. Ltd. #A-# Rating Outlook Stable

Stocks and Financial Services Press Releases Monday October 17, 2016 17:09
SINGAPORE--17 Oct--S&P Global Ratings

SINGAPORE (S&P Global Ratings) Oct. 17, 2016--S&P Global Ratings said today that it had affirmed its 'A-' local currency long-term financial strength rating and counterparty credit rating on Bangkok Insurance Public Co. Ltd. The outlook is stable. We also affirmed our 'axAA' long-term ASEAN regional scale rating on the Thailand-based insurer.

"We affirmed the ratings because we expect Bangkok Insurance to maintain its strong competitive position in Thailand and its strong capital and earnings over the next 24 months," said S&P Global Ratings credit analyst Trupti Kulkarni.

We assess the insurer's stand-alone credit profile as 'a-'.

The rating on Bangkok Insurance is higher than the foreign currency sovereign credit rating on Thailand (foreign currency BBB+/Stable/A-2; local currency A-/Stable/A-2; ASEAN regional scale axAA/axA-1). We believe the insurer's liquidity ratio will exceed 100% and its regulatory capital will remain positive under our hypothetical stress-scenario of a sovereign foreign-currency default.

We expect Bangkok Insurance's good market presence and brand recognition in Thailand to continue to support its strong competitive position. This factor, together with our intermediate industry and country risk assessment of Thailand's property and casualty market, supports Bangkok Insurance's strong business risk profile.

"We expect Bangkok Insurance to maintain its strong capital and earnings over the next 24 months, which supports our assessment of the insurer's financial risk profile as moderately strong," said Ms. Kulkarni. "We assess Bangkok Insurance's risk position as moderate due to the insurer's high investment leverage and concentration."

Bangkok Insurance has adequate financial flexibility, in our view, reflecting its access to a moderate range of capital resources (as a listed company) and external liquidity. The insurer has no outstanding debt, and we do not expect

its leverage to increase over the next two years.

We consider Bangkok Insurance's enterprise risk management (ERM) to be adequate. The company's risk exposure is straightforward, and it has processes to monitor and control risks. We expect Bangkok Insurance to continue to enhance its ERM practices to effectively support its strategic plans and growth targets.

We assess Bangkok Insurance's management and governance as satisfactory and its liquidity as exceptional.
The stable outlook reflects our view that Bangkok Insurance will maintain its strong competitive position and capitalization and earnings over the next 24 months.

We expect the insurer's profitability to be under marginal pressure over the next 12-24 months due to continued economic slowdown in Thailand and strong price competition. We see a low likelihood that Bangkok Insurance will face losses similar to those in late 2011, given changes to its underwriting strategy and tighter management of flood risk over the years.

We may lower the rating if Bangkok Insurance's financial risk profile deteriorates to lower adequate, which we view as unlikely over the next 12-24 months. This could occur because of a significant deterioration in equity markets. We may also lower the rating if we believe the insurer's susceptibility to a sovereign default has increased or if we lower our insurance industry and country risk assessment on Thailand's property and casualty sector.

An upgrade is unlikely in the next one to two years. We could upgrade Bangkok Insurance if the insurer's financial risk profile improves to strong, which could happen due to: (1) higher prospective capital adequacy levels with no deterioration in the risk position and financial flexibility; or (2) improvement in the risk position through reduced investment exposure.


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