OREANDA-NEWS. Fitch Ratings has affirmed Thai Life Insurance Public Company Limited's (TLI) International and National Insurer Financial Strength (IFS) ratings at 'A-' and 'AAA(tha)', respectively. The Outlook is Stable.

KEY RATING DRIVERS

The ratings reflect TLI's solid market franchise, sound financial performance, conservative investment portfolio, and strong capitalisation.

TLI is the third-largest life insurer by total premiums written. The company maintained a 12.5% market share in 2014 (2013: 12.4%), despite increased competition from the bancassurance channel, due to its strong agency channel. TLI has the second-largest agency network in the country and about 84% of its premiums written in 2014 were through the agency channel.

TLI's annualised pre-tax return on assets was 3.1% at end-3Q14 (2013: 2.2%), which compared favourably to the median 0.9% for 'A'-rated peers. The company's strong profitability is supported by its focus in high margin products and its pricing discipline.

TLI's investment portfolio remains conservative. Fixed-income instruments and cash made up about 85% of TLI's invested assets at end-3Q14. Its life insurance investments are prudently managed, with domestic corporate and foreign fixed-income investments limited to investment grade instruments on the international and national rating scales, respectively.

Fitch believes the implementation of stricter regulatory capital requirements will have limited impact on TLI, which is supported by its strong capital buffer, consistent healthy profitability and prudent capital management. The company's risk-based capital (RBC) ratio was at 464% at end-3Q14 (end-2013: 442%), well above the minimum regulatory requirement at 140%.

Meiji Yasuda Life Insurance Company (Meiji Yasuda Life; IFS: A+/Rating Watch Negative) acquired 15% of TLI in 2013 as part of its international diversification. Fitch expects the partnership to support TLI's risk management, and sales and product capabilities in the medium term.

RATING SENSITIVITIES

Key rating triggers for a downgrade include a material decline in its capital buffer that can be seen in its RBC ratio dropping below 250% for an extended period, and a sustained weakening in profitability that is reflected in pre-tax return on assets sustained below 1%. If Thailand's Long-Term Local Currency Issuer Default Rating (IDR) of 'A-' with Stable Outlook is downgraded, the IFS rating on the insurer is also likely to be lowered.

An upgrade is unlikely in the near term as TLI's International IFS rating is at the same level as Thailand's Long-Term Local Currency IDR. TLI's National IFS is already at the highest possible level.