Thai Life Rating Affirmed at ‘A-‘ with Stable Outlook
Fitch Ratings has reaffirmed the Insurer Financial Strength (IFS) Rating of Thai Life Insurance (TLI) Public Company Limited at ‘A-‘ (Strong) and the national IFS Rating at ‘AAA(tha)’. The outlook for the company remains stable.
The affirmation reflects TLI’s consistent financial performance, supported by a sound new business value (NBV) margin, a ‘Favorable’ company profile, and solid risk-based capitalization. However, these strengths are partially offset by the company’s asset and investment risk.
Rating Drivers
Resilient Financial Performance: TLI’s earnings performance has shown resilience despite economic challenges and increasing medical inflation. The annualized Return on Equity (ROE) for the first nine months of 2024 reached 11%, closely mirroring the average of 10% from 2022 to the end of the third quarter of 2024. TLI’s NBV margin remained strong at 62% during the first nine months of 2024, the same as the corresponding period in 2023. This was supported by solid margins in endowment and whole life products, as well as an increased contribution from insurance riders to the annual premium equivalent. While the NBV margin for these riders decreased slightly in the first nine months of 2024, it remained robust at 92% (9M2023: 101%). TLI’s stable investment yield, consistently above 3%, has also contributed to the stability of its earnings and finances.
Strong Market Presence: TLI maintains a robust business presence in Thailand. In 2024, the company held the third-largest market share at 13.4% based on total premiums written, despite its moderate operating scale compared to other regional insurers. Fitch considers TLI’s company profile ‘Favorable’ in comparison to other Thai insurers, attributing this to a ‘Favorable’ business profile and a ‘Neutral’ corporate governance profile. The company offers a broad range of products, including protection, savings, healthcare, and investment-linked options. In 2024, established and robust distribution channels supported the company, with tied agents accounting for about 74% of premiums written while bancassurance partnerships with local banks contributed roughly 19%. Approximately 7% of premiums came from other distribution channels.
Solid Risk-Based Capitalization: TLI’s Fitch Prism Global Model score was categorized as ‘Extremely Strong’ at the close of the third quarter of 2024, consistent with its 2023 assessment. The Risk-Based Capital (RBC) ratio improved to 410% by the end of the third quarter of 2024, up from 398% in 2023, and significantly exceeded the regulatory requirement of 140%. Fitch anticipates TLI will maintain solid capitalization with a substantial buffer over the medium term.
Risky Asset Ratio Remains Substantial: TLI’s Fitch-adjusted risky asset ratio was at a high level of 185% at the end of the third quarter of 2024 (2023: 182%). Risky assets primarily included equities, bonds rated below investment grade on the international scale, and the company’s substantial exposure to sovereign bonds (50% of TLI’s total investments at the end of the third quarter of 2024, with 15% of this exposure categorized as risky assets under Fitch’s criteria). The risky asset ratio remains higher than the guideline for an IFS ‘A’ rating.
TLI’s portfolio mix remained largely unchanged, with fixed-income securities and deposits making up 80% of the total portfolio at the end of the third quarter of 2024.
