Allianz Taiwan is a mid-sized fish in a big pond: Moody’s
It is one of the top three investment-linked product underwriters in Taiwan.
Despite being one of the top three investment-linked product underwriters in Taiwan, Allianz Taiwan continues to be a mid-sized player in a highly competitive and mature market, Moody’s said.
In 2021, the insurer derived around 85% of total premiums from investment-linked products, which underpins its lower reliance on spread gains than its domestic peers. Mortality and morbidity gains derived from the sales of health and accident riders attached to investment-linked products and fee income are key contributors to the insurer's operating profit.
Its traditional life products also entail low negative spread risks because of limited exposure to high guarantee rate policies following its divestment of most of its traditional life portfolio to China Life Insurance Co., Ltd. in Taiwan in 2018.
“The insurer's strong risk-based capitalization benefits from low capital consumption from its investment-linked products and the capital support from Allianz SE. Its risk-based capital (RBC) ratio stood high at over 700% as of the end of 2021. Moody's expects Allianz Taiwan's solid earnings and stringent local regulation in capital repatriation to support a strong solvency buffer above the regulatory minimum of 200% over the next 12-18 months,” Moody’s said.
Despite all of this, the insurer remains a mid-sized fish in a huge, highly competitive pond resulting from the insurer's weak product diversification which exposes its earnings and premium growth to evolving customer demand and intensifying competition in investment-linked products. Moody's said it expects weaker product demand amid rising equity market volatility and sales disruptions brought by the resurgence in coronavirus cases to strain the insurer's premiums and fee income growth in 2022.
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