AM Best has affirmed the financial strength rating of ‘A’ (Excellent) and the long-term issuer credit rating of ‘a’ (Excellent) for Central Reinsurance Corporation (Central Re), with a ‘stable’ outlook. The affirmation reflects Central Re’s very strong balance sheet, adequate operating performance, favourable business profile, and appropriate enterprise risk management, says Best. The agency says the company’s risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio (BCAR), remained at the strongest level at year-end 2024. Benefitting from retained operating profits, Central Re’s adjusted capital and surplus increased by 8.9 per cent to 22.7 billion new Taiwan dollars in 2024. The reinsurer maintains a prudent investment strategy, with the majority of its portfolio in diversified and liquid securities, including investment-grade bonds, and cash and cash equivalents. AM Best expects the company’s BCAR to remain solid over the short to intermediate term. Central Re reported a net profit of NT$2.5 billion in 2024, with a five-year return on equity of 8.0 per cent from 2020 to 2024. Domestic non-life business contracted moderately during the year due to reduced voluntary motor business, while underwriting margins narrowed as a result of higher catastrophe claims. Overseas premium volumes also declined as the company restructured its portfolio to improve quality. However, the domestic life segment continued to generate steady earnings, supporting overall underwriting results. Investment income benefitted from stable returns on fixed-income assets and dividend income, although currency exchange rate fluctuations have added volatility in recent years. As Taiwan’s sole domestic reinsurer, Central Re benefits from long-standing relationships with local cedants. While its domestic market share has eased slightly in recent years due to a portfolio skew toward personal lines, AM Best expects the company’s leadership in both life and non-life segments to remain intact over the medium term. Overseas business accounted for around one-fifth of gross written premium in 2024, and the company is expected to maintain a prudent approach to underwriting while enhancing geographic and client diversification.
