New York, August 03, 2022 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings -and other ratings that are associated with the same analytical units for the rated entity(entities) listed below.
The review was conducted through a portfolio review discussion held on 27 July 2022 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. A possible outcome from periodic reviews is a referral of a rating to a rating committee.
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This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement.
Key Rating Considerations
The principal methodology used for the rated entities listed below was Banks Methodology published in July 2021. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Banks Methodology
Asset Risk: a bank's asset risk is fundamental to creditworthiness because banks have high leverage, which implies that a small deterioration in asset value has a large effect on solvency. Credit quality problems are typically at the root of most bank failures, even though these problems can take a variety of forms, for example a deteriorating value of the loan collateral, resulting in higher losses. Asset risk includes a bank's other assets as well may also be vulnerable to other non-lending risk including market risk and operational risk.
Capital: asset risk and the need for capital go hand in hand. The greater the risk of unexpected loss, the more capital a bank needs to hold in order to retain the confidence of creditors, which enables the bank to fund itself and to shield bondholders from loss.
Profitability: profitability is an important indicator of an institution's ability to generate capital, and is hence another measure of its ability to absorb losses and recover from shocks. A bank with weak or negative profitability has less ability to absorb asset risks than one with strong internal capital generation capacity, other things being equal.
Funding Structure: a bank's funding structure has a strong bearing on its probability of failure or requiring assistance, because some sources of funds are less reliable than others. A bank that makes significant use of an unreliable funding source — perhaps short-term in nature, or from particularly risk-sensitive counterparties — is more likely to suffer periodic difficulties in refinancing its debt, putting it at greater risk of needing support.
Liquid resources: to provide a full picture of liquidity, an assessment of the funding structure of a bank has to be viewed in the context of the composition of its assets. Liquid resources are enhanced when a bank has high-quality liquid assets that can both be readily sold or pledged for cash in private markets in response to its funding counterparts' changing behavior, or that can in extremis be repoed with central banks under standard terms.
Qualitative considerations: There are occasionally other bank-specific considerations that we believe can influence core fundamentals. These additional factors are typically qualitative in nature, although in some cases our assessments may be informed by certain quantitative indicators. These factors include Business Diversification, Opacity and Complexity and Corporate Behavior.
The bank ratings are ultimately derived from the application of our Support and Structural Analysis, which comprises the following:
Affiliate Support, where an entity may be supported by other entities within a group, or occasionally affiliated third parties, thus reducing its probability of default.
Loss Given Failure (LGF), where we undertake a liability-side analysis to assess the impact of a failure — absent government support — in terms of the potential resultant loss on the bank's rated debt instruments. We also incorporate instrument-specific coupon features.
Government Support, where an entity may be supported by public bodies, such as local, regional, national, or supranational institutions, again reducing the risk for some or all instruments. We assess this using our JDA framework.
• Cathay Financial Holding Co., Ltd
• China Ping An Insurance Overseas (Hldgs) Ltd.
• Fubon Financial Holding Co., Ltd.
The principal methodology used for the rated entities listed below was Government-Related Issuers Methodology published in February 2020. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Government-Related Issuers Methodology
Assigning a Baseline Credit Assessment (BCA): The majority of Government-Related Issuers (GRIs) begin with an assessment of the GRI's standalone strength (i.e. BCA) – its ability to service and repay outstanding debt without recourse to extraordinary support from the supporting government - using the published sector-specific methodology that is most suitable for the predominant activities of the GRI. Our assessment of standalone strength includes any day-to-day support received from the government that can be clearly distinguished from extraordinary support. Support mechanisms, such as an obligation of the government to ensure the GRI's solvency and liquidity, are reflected in the BCA when they are legally or contractually documented.
Government uplift: The GRI's ratings include any uplift due to systemic support and typically focus on three structural factors and three factors explaining the level of the government's willingness to provide support. Structural factors address the legal and quasi-legal aspects of the government's relationship with the GRI and include: (1) guarantees, (2) ownership level and (3) barriers to support. The factors underlying willingness consider the softer connections between the two entities and include (4) the likelihood of government intervention, (5) political linkages and (6) economic importance. Support is determined using a joint default analysis framework which considers an estimate of the likelihood of extraordinary support, an assessment of the credit quality of the supporting government, and default correlation between the two entities.
GRIs without a BCA: In limited instances, it is not possible or meaningful to assign a BCA. The GRI is so inextricably linked to the government that a meaningful standalone BCA cannot be derived. In such cases, a top-down analytical approach is used that chiefly considers the ability and willingness of the government to provide timely support, instead of the usual bottom-up approach of starting with the BCA and then considering uplift towards the government's rating.
• China Life Insurance (Overseas) Company Ltd.
• China Life Insurance Co Ltd
• China Life P&C Insurance Company Limited
• China Pacific Life Insurance Co., Ltd.
• China Pacific Property Insurance Co Ltd
• PICC Life Insurance Company Limited
• PICC Property and Casualty Company Limited
The principal methodology used for the rated entities listed below was Life Insurers Methodology published in September 2021. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Life Insurers Methodology
Market Position and Brand: Market position and brand are key factors representing a company's ability to develop and sustain competitive advantages in its chosen markets. Metrics can include but are not limited to relative market share, absolute size, and position within selected markets.
Distribution: A company's access to distribution channels, its ability to control those channels, and its relationships with producers affect its creditworthiness and standing in the market. Metrics can include but are not limited to proportion of captive or controlled distribution, and number of distinct distribution channels.
Product Focus and Diversification: A company's chosen business lines and product offerings have a major influence on its risk profile and creditworthiness because product segments have distinct volatility and competitive attributes. Metrics can include but are not limited to low-risk reserves as a percentage of total reserves, product mix and features, and number of distinct product lines.
Asset Quality: Life insurers mainly invest in high-quality liquid assets, although to improve investment yields and/or match guarantees embedded in their liabilities, many companies allocate a portion of their investments to higher-risk assets. Metrics can include but are not limited to high-risk assets and goodwill & intangibles as percentages of equity, as well as investment concentrations and portfolio liquidity.
Capital Adequacy: An insurer's capital adequacy determines the extent to which it can absorb losses stemming from business and financial risks, including from stress scenarios. Metrics can include but are not limited to adjusted shareholders' equity as a percentage of assets, regulatory capital ratios, insurers' own capital adequacy metrics, and output from Moody's Capital Tool.
Profitability: An insurer's earnings capacity, including earnings quality and sustainability, shows how readily it can meet policy and other financial obligations and generate capital internally. Metrics can include but are not limited to return on capital, return on equity, return on assets, and volatility of such returns.
Liquidity and Asset/Liability Management: A company's asset liability management and its associated liquidity are critical risk factors in the confidence-sensitive life insurance market. Metrics can include but are not limited to liquid assets as a percentage of liquid liabilities, duration and cash flow matching, and economic and market scenario testing.
Financial Flexibility: Insurers benefit from the ability to raise capital externally for growth or acquisitions or to meet unexpected financial demands. Metrics can include but are not limited to adjusted financial leverage, total leverage, earnings coverage, and cash flow coverage, as well as holding company liquidity and access to committed credit facilities.
Other Rating Considerations: In addition to the factors discussed above, other factors such as management, enterprise risk, accounting policies and disclosures, sovereign and regulatory environment, and explicit or implicit support can affect the insurance financial strength ratings of insurance operating companies.
Instrument Notching Considerations: The ratings for debt and preferred stock instruments issued by insurance firms are generally notched down from the insurance financial strength ratings based on the issuing entity, jurisdiction, seniority, collateral, and other features of the instruments.
• AIA Group Limited
• Allianz Taiwan Life Insurance Company Ltd.
• Aviva-COFCO Life Insurance Co., Ltd.
• BOC Group Life Assurance Co. Ltd
• Cathay Financial Holding Co., Ltd
• Cathay Life Insurance Co., Ltd
• CCB Life Insurance Company Limited
• China Life Insurance (Overseas) Company Ltd.
• China Life Insurance Co Ltd
• China Pacific Life Insurance Co., Ltd.
• China Ping An Insurance Overseas (Hldgs) Ltd.
• FTLife Insurance Company Limited
• Fubon Financial Holding Co., Ltd.
• FWD Limited
• Hanwha General Insurance Co., Ltd.
• Hanwha Life Insurance Co., Ltd.
• Heungkuk Life Insurance Co., Ltd.
• ICBC-AXA Assurance Co., Ltd.
• KDB Life Insurance Co., Ltd.
• Kyobo Life Insurance Co., Ltd
• New China Life Insurance Company Ltd.
• PICC Life Insurance Company Limited
• Ping An Life Insurance Company of China, Ltd.
• Prudential Public Limited Company
• Resolution Life Australasia Limited
• Singapore Life Holdings Pte. Ltd.
• Sunshine Life Insurance Corporation Limited
• Taikang Life Insurance Co., Ltd.
• Tong Yang Life Insurance Co., Ltd.
The principal methodology used for the rated entities listed below was Property and Casualty Insurers Methodology published in September 2021. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Property and Casualty Insurers Methodology
Market Position, Brand and Distribution: Market position, brand and distribution are key factors representing a company's ability to develop and sustain competitive advantages in its chosen markets. Metrics can include but are not limited to relative market share, underwriting expense ratio, and diversity of distribution channels.
Product Focus and Diversification: A company's chosen business lines have a major influence on its risk profile and creditworthiness because business classes have distinct volatility and competitive attributes. Metrics can include but are not limited to product line and geographic diversification, relative volatility of product lines, and breadth and depth of markets served.
Asset Quality: P&C insurers mainly invest in high-quality liquid assets, given the uncertain timing and magnitude of their liability payments, although companies often allocate a portion of their investments to higher-risk assets. Metrics can include but are not limited to high-risk assets, reinsurance recoverables and goodwill & intangibles as percentages of equity, as well as investment concentrations and portfolio liquidity.
Capital Adequacy: An insurer's capital adequacy determines the extent to which it can absorb losses stemming from business and financial risks, including from stress scenarios. Metrics can include but are not limited to gross underwriting leverage, regulatory capital ratios, insurers' own capital adequacy metrics, and output from Moody's Capital Tool.
Profitability: An insurer's earnings capacity, including earnings quality and sustainability, shows how readily it can meet policy and other financial obligations and generate capital internally. Metrics can include but are not limited to combined underwriting ratio, return on capital, return on equity, return on revenue, and volatility of such returns.
Reserve Adequacy: Our estimate of the redundancy or deficiency of an insurer's loss and loss adjustment expense reserves helps shape our assessment of its reported earnings and capitalization. Metrics can include but are not limited to yearly and weighted average loss development as a percentage of reserves, funding ratio of latent liabilities, and various actuarial estimates.
Financial Flexibility: Insurers benefit from the ability to raise capital externally for growth or acquisitions or to meet unexpected financial demands. Metrics can include but are not limited to adjusted financial leverage, total leverage, earnings coverage, and cash flow coverage, as well as holding company liquidity and access to committed credit facilities.
Other Rating Considerations: In addition to the factors discussed above, other factors such as management, enterprise risk, accounting policies and disclosures, sovereign and regulatory environment, and explicit or implicit support can affect the insurance financial strength ratings of insurance operating companies.
Instrument Notching Considerations: The ratings for debt and preferred stock instruments issued by insurance firms are generally notched down from the insurance financial strength ratings based on the issuing entity, jurisdiction, seniority, collateral, and other features of the instruments.
• AAI Limited
• Cathay Century Insurance Co Ltd
• Cathay Financial Holding Co., Ltd
• China Life P&C Insurance Company Limited
• China Pacific Anxin Agriculture Ins. Co Ltd
• China Pacific Property Insurance Co Ltd
• China Ping An Insurance Overseas (Hldgs) Ltd.
• Chung Kuo Insurance Co., Ltd
• Construction Guarantee Cooperative
• Construction Industry Guarantee
• Dinghe Property Insurance Co., Ltd.
• Engineering Guarantee Insurance
• Fidelidade Macau - Insurance Company Limited
• Fubon Financial Holding Co., Ltd.
• Fubon Insurance Co., Ltd.
• Fubon Property & Casualty Insurance Co., Ltd.
• Guoren Property & Casualty Insurance Co., Ltd
• Guoyuan Agricultural Insurance Co., Ltd
• Hanwha General Insurance Co., Ltd.
• Korea Specialty Contractor Financial Coop.
• Pacific Health Insurance Co., Ltd.
• PICC Property and Casualty Company Limited
• Ping An P&C Insurance Company of China, Ltd.
• QBE Insurance Group Limited
• Sunlight Agricultural Mutual Insurance Co
• Tokio Marine & Nichido Fire Ins Co (CN) Ltd
• ZhongAn Online P&C Insurance Co., Ltd.
The principal methodology used for the rated entities listed below was Reinsurers Methodology published in November 2019. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Reinsurers Methodology
Market Position, Brand and Distribution: Market position, brand and distribution are key factors representing a company's ability to develop and sustain competitive advantages in its chosen markets. Metrics can include but are not limited to relative market share, proportion of premiums written directly, average line size, and number of lead positions.
Business and Geographic Diversification: A company's chosen business lines have a major influence on its risk profile and creditworthiness because business classes have distinct volatility and competitive attributes. Metrics can include but are not limited to product line and geographic diversification, and relative volatility of product lines.
Asset Quality: Reinsurer's mainly invest in high-quality liquid assets, given the uncertain timing and magnitude of their liability payments, although companies often allocate a portion of their investments to higher-risk assets. Metrics can include but are not limited to high-risk assets, reinsurance recoverables and goodwill & intangibles as percentages of equity, as well as investment concentrations and portfolio liquidity.
Capital Adequacy: A reinsurer's capital adequacy determines the extent to which it can absorb losses stemming from business and financial risks, including from stress scenarios. Metrics can include but are not limited to gross underwriting leverage, gross and net natural catastrophe exposures as percentages of equity, regulatory capital ratios, and reinsurers' own capital adequacy metrics.
Profitability: A reinsurer's earnings capacity, including earnings quality and sustainability, shows how readily it can meet policy and other financial obligations and generate capital internally. Metrics can include but are not limited to combined underwriting ratio, return on capital, return on equity, return on revenue, and volatility of such returns.
Reserve Adequacy: Our estimate of the redundancy or deficiency of a reinsurer's loss and loss adjustment expense reserves helps shape our assessment of its reported earnings and capitalization. Metrics can include but are not limited to yearly and weighted average loss development as a percentage of reserves, funding ratio of latent liabilities, and various actuarial estimates.
Financial Flexibility: Reinsurers benefit from the ability to raise capital externally for growth or acquisitions or to meet unexpected financial demands. Metrics can include but are not limited to adjusted financial leverage, total leverage, and earnings coverage, as well as holding company liquidity and access to committed credit facilities.
Other Rating Considerations: In addition to the factors discussed above, other factors such as management, enterprise risk, accounting policies and disclosures, sovereign and regulatory environment, and explicit or implicit support can affect the insurance financial strength ratings of insurance operating companies.
Instrument Notching Considerations: The ratings for debt and preferred stock instruments issued by insurance firms are generally notched down from the insurance financial strength ratings based on the issuing entity, jurisdiction, seniority, collateral, and other features of the instruments.
• China Railway Captive Insurance Co., Ltd.
• CNPC Captive Insurance Company Limited
• Equator Reinsurances Limited
The principal methodology used for the rated entities listed below was Life Insurers Methodology (Japanese) published in September 2021. Please see the Rating Methodologies page on https://ratings.moodys.com/japan/ratings-news for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Life Insurers Methodology (Japanese)
Market Position and Brand: Market position and brand are key factors representing a company's ability to develop and sustain competitive advantages in its chosen markets. Metrics can include but are not limited to relative market share, absolute size, and position within selected markets.
Distribution: A company's access to distribution channels, its ability to control those channels, and its relationships with producers affect its creditworthiness and standing in the market. Metrics can include but are not limited to proportion of captive or controlled distribution, and number of distinct distribution channels.
Product Focus and Diversification: A company's chosen business lines and product offerings have a major influence on its risk profile and creditworthiness because product segments have distinct volatility and competitive attributes. Metrics can include but are not limited to low-risk reserves as a percentage of total reserves, product mix and features, and number of distinct product lines.
Asset Quality: Life insurers mainly invest in high-quality liquid assets, although to improve investment yields and/or match guarantees embedded in their liabilities, many companies allocate a portion of their investments to higher-risk assets. Metrics can include but are not limited to high-risk assets and goodwill & intangibles as percentages of equity, as well as investment concentrations and portfolio liquidity.
Capital Adequacy: An insurer's capital adequacy determines the extent to which it can absorb losses stemming from business and financial risks, including from stress scenarios. Metrics can include but are not limited to adjusted shareholders' equity as a percentage of assets, regulatory capital ratios, insurers' own capital adequacy metrics, and output from Moody's Capital Tool.
Profitability: An insurer's earnings capacity, including earnings quality and sustainability, shows how readily it can meet policy and other financial obligations and generate capital internally. Metrics can include but are not limited to return on capital, return on equity, return on assets, and volatility of such returns.
Liquidity and Asset/Liability Management: A company's asset liability management and its associated liquidity are critical risk factors in the confidence-sensitive life insurance market. Metrics can include but are not limited to liquid assets as a percentage of liquid liabilities, duration and cash flow matching, and economic and market scenario testing.
Financial Flexibility: Insurers benefit from the ability to raise capital externally for growth or acquisitions or to meet unexpected financial demands. Metrics can include but are not limited to adjusted financial leverage, total leverage, earnings coverage, and cash flow coverage, as well as holding company liquidity and access to committed credit facilities.
Other Rating Considerations: In addition to the factors discussed above, other factors such as management, enterprise risk, accounting policies and disclosures, sovereign and regulatory environment, and explicit or implicit support can affect the insurance financial strength ratings of insurance operating companies.
Instrument Notching Considerations: The ratings for debt and preferred stock instruments issued by insurance firms are generally notched down from the insurance financial strength ratings based on the issuing entity, jurisdiction, seniority, collateral, and other features of the instruments.
• Aflac Life Insurance Japan, Ltd.
• Dai-ichi Life Insurance Company, Limited
• Fukoku Mutual Life Insurance Company
• Meiji Yasuda Life Insurance Company
• Nippon Life Insurance Company
• Sumitomo Life Insurance Company
The principal methodology used for the rated entities listed below was Property and Casualty Insurers Methodology (Japanese) published in September 2021. Please see the Rating Methodologies page on https://ratings.moodys.com/japan/ratings-news for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Property and Casualty Insurers Methodology (Japanese)
Market Position, Brand and Distribution: Market position, brand and distribution are key factors representing a company's ability to develop and sustain competitive advantages in its chosen markets. Metrics can include but are not limited to relative market share, underwriting expense ratio, and diversity of distribution channels.
Product Focus and Diversification: A company's chosen business lines have a major influence on its risk profile and creditworthiness because business classes have distinct volatility and competitive attributes. Metrics can include but are not limited to product line and geographic diversification, relative volatility of product lines, and breadth and depth of markets served.
Asset Quality: P&C insurers mainly invest in high-quality liquid assets, given the uncertain timing and magnitude of their liability payments, although companies often allocate a portion of their investments to higher-risk assets. Metrics can include but are not limited to high-risk assets, reinsurance recoverables and goodwill & intangibles as percentages of equity, as well as investment concentrations and portfolio liquidity.
Capital Adequacy: An insurer's capital adequacy determines the extent to which it can absorb losses stemming from business and financial risks, including from stress scenarios. Metrics can include but are not limited to gross underwriting leverage, regulatory capital ratios, insurers' own capital adequacy metrics, and output from Moody's Capital Tool.
Profitability: An insurer's earnings capacity, including earnings quality and sustainability, shows how readily it can meet policy and other financial obligations and generate capital internally. Metrics can include but are not limited to combined underwriting ratio, return on capital, return on equity, return on revenue, and volatility of such returns.
Reserve Adequacy: Our estimate of the redundancy or deficiency of an insurer's loss and loss adjustment expense reserves helps shape our assessment of its reported earnings and capitalization. Metrics can include but are not limited to yearly and weighted average loss development as a percentage of reserves, funding ratio of latent liabilities, and various actuarial estimates.
Financial Flexibility: Insurers benefit from the ability to raise capital externally for growth or acquisitions or to meet unexpected financial demands. Metrics can include but are not limited to adjusted financial leverage, total leverage, earnings coverage, and cash flow coverage, as well as holding company liquidity and access to committed credit facilities.
Other Rating Considerations: In addition to the factors discussed above, other factors such as management, enterprise risk, accounting policies and disclosures, sovereign and regulatory environment, and explicit or implicit support can affect the insurance financial strength ratings of insurance operating companies.
Instrument Notching Considerations: The ratings for debt and preferred stock instruments issued by insurance firms are generally notched down from the insurance financial strength ratings based on the issuing entity, jurisdiction, seniority, collateral, and other features of the instruments.
• MS&AD Insurance Group Holdings, Inc.
• Sompo Japan Insurance Inc.
• Tokio Marine & Nichido Fire Insurance Co
This announcement applies only to Rated Entities with EU rated, UK rated, EU endorsed and UK endorsed ratings. Rated Entities, with Non EU rated, non UK rated, non EU endorsed and non UK endorsed ratings may be referenced herein to the extent necessary, if they are part of the same analytical unit.
Please see the Issuer page on https://ratings.moodys.com for each of the ratings covered, most updated credit rating action, rating history, and Credit Rating action Press Release including the rating rationale and factors that could lead to a rating upgrade or downgrade.
Please see the Issuer page on https://ratings.moodys.com/japan/ratings-news for each of the ratings covered, most updated credit rating action, rating history, and Credit Rating action Press Release including the rating rationale and factors that could lead to a rating upgrade or downgrade.
This publication does not announce a credit rating action.
For any credit ratings referenced in this publication, please see the issuer/deal page on https://ratings.moodys.com
for the most updated credit rating action information and rating history.
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