Nan Shan Life Insurance in Taiwan is on a positive trajectory, as projected by S&P Global Ratings. The insurer is anticipated to sustain its enhanced capital and earnings over the ensuing two years. S&P has affirmed that Nan Shan Life possesses sufficient capital adequacy. It holds a robust business position in Taiwan’s life insurance sector, bolstered by a solid franchise, a resilient distribution network, and a proactive product strategy.
The resumption of investment-linked product sales in 2024 has been a significant boost. This has enabled Nan Shan Life to reclaim a comprehensive product range, placing it on a par with other major contenders in the Taiwan life insurance market. The insurer’s focus on moderate premium growth, particularly in long-tenor and protection type products, has been a driving force behind its recent improvement. Additionally, favorable equity market conditions and full earnings retention have contributed to the accumulation of total adjusted capital over the past two years, leading S&P to upgrade Nan Shan Life Insurance’s long-term financial strength and issuer credit ratings to ‘A-‘ from ‘BBB+’.
Since 2022, the insurer has adopted a more conservative investment approach, resulting in a decline in equity exposure. By mid-2024, equity exposure had dropped to 11% of total invested assets from 14% at the end of 2021. S&P anticipates no major alterations in the investment mix or a significant increase in equity exposure in the next two years. While Nan Shan Life’s more prudent business growth and investment appetite bode well for maintaining capital and earnings, its relatively higher foreign exchange risk exposure compared to local peers does somewhat temper its otherwise satisfactory financial risk profile. Nevertheless, S&P believes the insurer will manage investment risk effectively through vigilant monitoring and proactive control, with no significant structural shifts in the investment mix expected in the near term.
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