AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of South China Insurance Co., Ltd. (South China Insurance) (Taiwan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect South China Insurance’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

South China Insurance’s risk-adjusted capitalisation remained at the strongest level at year-end 2024, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s adjusted capital and surplus, including special reserves provisioned for the non-compulsory auto liability insurance (non-CALI) business, grew moderately during 2024 and the first three quarters of 2025, reaching TWD 9,774 million (USD 298 million). Growth in net profit derived from underwriting and investment results was the major contributor, although partially offset by dividend payout. South China Insurance’s investment portfolio remains liquid and diversified with most of its assets held in investment grade bonds and cash, and the company continues to manage currency risk in the investment portfolio through currency hedging. AM Best expects the company’s BCAR and balance sheet strength to stay supportive of its very strong balance sheet strength assessment in the short to intermediate term.

South China Insurance has maintained profitability over the last few years, with a five-year average return-on-equity ratio of 9.3% (2020–2024), based on adjusted capital and surplus. The company reported net profit after tax of TWD 1,293 million (USD 39 million) and TWD 1,270 million (USD 39 million) in 2024 and the first nine months of 2025, respectively, thanks to the contribution from underwriting and investment results. South China Insurance recorded a low single-digit growth in gross premiums written in 2024, supported by motor and casualty products. Underwriting results improved during the year, reflected by a lower loss ratio for major business lines, including motor and accident and health (A&H) business. Investment results remained favourable through 2024 and in the first three quarters of 2025, supported by stable streams of interest and dividend income generated from its investment portfolio.

South China Insurance is a midsized insurer in Taiwan’s non-life market. The company’s underwriting portfolio is moderately diversified with motor dominating its business, followed by fire, casualty and A&H lines. The company continues to source its revenue from a diversified distribution network while leveraging cross-selling opportunities more broadly with its affiliates in Hua Nan Financial Holdings Co. Ltd.

Negative rating actions could occur if there is a material decline in South China Insurance’s risk-adjusted capitalisation. Negative rating actions also could take place if there is a sustained deteriorating trend or an increased level of adverse volatility in the company's operating performance. Although the likelihood of positive rating actions is relatively low, they could occur if South China Insurance achieves sustained improvement in its operating performance while maintaining a robust level of risk-adjusted capitalisation.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

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