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Fitch Ratings affirms Urtrust Insurance Co., Ltd.'s rating of 'BBB'.

Hong Kong: Fitch Ratings, a nationally recognized statistical rating organization (NRSRO) designated by the U.S. Securities and Exchange Commission, affirmed China-based auto insurer Urtrust Insurance Co., Ltd.'s (Urtrust) Insurer Financial Strength (IFS) rating of 'BBB' (Good).

The Outlook is Stable. The rating affirmation reflects Urtrust's strong capitalisation, moderately weak underwriting results, and good business profile given its ability to expand its motor insurance coverage through the sales network of its parent. Urtrust began underwriting non-life insurance business in China from June 2011 and captured a market share of 0.1% in Chinese non-life insurance market in 9M17. The company is 60% owned by Guangzhou Automobile Group Co., Ltd (GAC), the sixth-largest motor vehicle manufacturer in China.

The strong capitalisation will provide a buffer against potential investment risks and underwriting volatility associated with its business expansion. Urtrust's capitalisation has remained strong. Its capital score, as measured by Fitch's Prism Factor-Based Capital Model (FBM), stood at 'Very Strong' at end-1H17 and its comprehensive solvency ratio under the China Risk Oriented Solvency System (C-ROSS) amounted to 359% at end-3Q17, well in excess of the 100% regulatory minimum requirement.

Fitch expects the company's shareholders to provide ongoing capital injection given Urtrust's underwriting deficits and expansion. Essentially, the Guangzhou Municipal Government controls the insurer through GAC and several other holding entities. Urtrust expects to obtain more equity capital in 2018 to replenish its solvency margin and to support its future investment.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Geographic Code:9CHIN
Date:Jan 20, 2018
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