Fubon Insurance surplus to keep momentum after capital injection: analyst

The insurance company was also described to have an adequate balance sheet.

Fubon Insurance's capital and surplus are forecasted to continue its momentum through the retention of non-pandemic insurance underwriting and investment profits, AM Best reported.

Fubon Insurance received a capital injection of TWD16b from its parent company, Fubon Financial Holding last 16 May. This is the second capital raise for Fubon Insurance, with the previous injection of TWD15b occurring in August last year.

AM Best described Fubon Insurance's balance sheet strength as adequate. 

The company's capital and surplus experienced a significant decline, plummeting by 88% from TWD45.4b in 2021 to TWD5.2b by the end of 2022, and further decreasing to TWD1.9 billion as of 31 March this year. 

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This deterioration was primarily caused by substantial claims arising from COVID-19 pandemic-related insurance products.

Following the second capital injection in May, Fubon Insurance's reported capital and surplus recovered to approximately TWD17b, and the company has witnessed a turnaround in net profit starting from April. 

However, the two rounds of capital injection totalling TWD31b account for roughly half of the estimated ultimate net claims incurred.

Nevertheless, AM Best believes that Fubon Financial Holding, the ultimate parent company, will remain dedicated to providing timely additional financial support to Fubon Insurance in order to strengthen the company's balance sheet if necessary.

Further, the insurer is unlikely that the capital position will fully recover to its pre-COVID-19 level in the short to medium term.