HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Hotai Insurance Co., Ltd. (Hotai Insurance) (Taiwan). The outlook of these Credit Ratings (ratings) is stable.
Hozan Investment Co., Ltd., a wholly owned subsidiary of Ho Tai Motor Co., Ltd. (Ho Tai Motor), completed its acquisition of Zurich Insurance Taiwan on Jan. 17, 2017, and changed the name to Hotai Insurance on March 1, 2017. Ho Tai Motor, the ultimate parent of Hotai Insurance, is a Taiwan market-leading distributor of well-known auto brands such as Toyota, Lexus and HINO. Ho Tai Motor also operates and invests in car rental and leasing, auto finance, auto insurance and the auto parts business.
The ratings reflect Hotai Insurance’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management. The ratings also reflect the lift the company receives from its non-insurance ultimate parent.
Hotai Insurance’s very strong balance sheet strength is supported by risk-adjusted capitalization that is at the strongest level. Operating performance has improved recently, as the company has successfully turned around its underwriting book and brought its combined ratio below 100% in 2017. As a subsidiary of Ho Tai Motor, the company benefits from a sustainable competitive advantage in the motor car dealer distribution channel that allowed it to double motor business volume in terms of gross premium written in 2017. A.M. Best expects Ho Tai Motor’s distribution network to continue to allow Hotai Insurance to scale up its motor portfolio in the near future.
Offsetting rating factors include execution risk, not only from transforming the business to be focused on motor insurance and the strategic integration with its new parent, but also achieving continuous growth in other lines simultaneously.
Positive rating actions could occur if Hotai Insurance can successfully implement its business transformation plan, and continuously demonstrate stable and favorable operating results. Negative rating actions could occur if the level of business commitment from the affiliated distribution channel decreases significantly or if Ho Tai Motor’s credit profile deteriorates. Negative rating actions also could occur if Hotai Insurance’s risk-adjusted capitalization declines sharply due to a higher-than-expected increase in the company’s risk profile.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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