AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Dhipaya Insurance Public Company Limited (Dhipaya) (Thailand). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Dhipaya’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Dhipaya’s risk-adjusted capitalisation remained at the strongest level in 2021, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s regulatory capital adequacy ratio also continued to exceed the regulatory minimum requirement by a good margin over a number of years. However, Dhipaya remains subject to moderate investment risk given its notable allocation to equities and mutual funds. In addition, the company relies heavily on reinsurance to support the underwriting of very large risks and to manage catastrophe exposure, although this is mitigated partially by the high credit quality of the company’s reinsurance counterparties.

The company has a track record of strong operating performance with a five-year average combined ratio and operating ratio of 80% and 70%, respectively (2017-2021). While Dhipaya continued to generate strong underwriting performance in the personal accident, fire and industrial all risk lines of business, the company recorded a contraction in overall technical profit in 2021 as a result of unfavourable claims experience from COVID-19-related policies. Although the COVID-19-related claims are expected to continue impacting Dhipaya’s underwriting performance over the near term, the company’s current portfolio composition with less exposure to highly competitive lines of business and its good balance of earnings are expected to mitigate these headwinds.

The company has established a strong presence in Thailand’s non-life market, ranking second with a market share of 11% in 2021 in terms of direct premium written. In addition, Dhipaya has held a dominant market position in several major segments such as personal accident, fire and industrial risks. The company’s business profile also benefits from its strong shareholder support through business referrals and access to extensive countrywide distribution networks.

AM Best views Dhipaya’s risk management capabilities as appropriate relative to the profile of the key risks. The company has developed a comprehensive ERM framework with proper risk identification and monitoring tools in place.

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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