Hotai Insurance to maintain strong capital stance until year-end

The prediction is due to the company’s improved balance sheet, attributable to its mitigation plan.

Rebounding from a negative outlook, Taiwan-based insurer, Hotai Insurance is predicted to continue a strong capital position for the remainder of 2023, AM Best said.

This will be driven by the release of pandemic insurance reserves as policies mature and claims stabilise, along with favorable performance in traditional insurance and investment returns. 

AM Best projects the company to move from a very weak capital adequacy level at the end of 2022 to a weak level by the end of 2023, with further strengthening in the following two years, although it may not reach pre-COVID-19 levels during that time.

The removal of the under review status and the assignment of a positive outlook for the Long-Term issuer credit rating (ICR) reflects improvements in the company's balance sheet strength. 

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This improvement is due to a mitigation plan that has raised reported shareholders' equity from a negative TW$4.4b at the end of 2022 to TW$1.8b by the end of June 2023. 

The improvement resulted from a capital injection of TW$4.5b from Ho Tai Motor, reserve releases related to pandemic insurance products, and recovery in earnings and asset valuations. 

Additionally, property sales in August 2023 added over TW$850 million to the company's capital position.

Hotai Insurance's credit ratings are based on several factors. The company's balance sheet strength is assessed as weak, while its operating performance is deemed adequate. Its business profile is considered neutral, and enterprise risk management (ERM) is marginal. These ratings also take into account the support received from its parent company, Ho Tai Motor Co., Ltd.