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

KEY RATING DRIVERS
The ratings reflect MTL's strong capital position and its prudent investment approach. The rating also considers the insurer's solid financial performance and its strong market position as the second largest life insurer in Thailand by total premiums written.

The ratings also reflect support from its major shareholders, Kasikornbank Public Company Limited (KBANK; Issuer Default Rating: BBB+/Stable), Thailand's fourth-largest commercial bank by total assets, and Ageas Insurance International N.V. (Ageas; IDR: A/Stable). The company enjoys exclusive bancassurance distribution by KBANK and benefits from technical and operational support from Ageas.

MTL's Prism Factor-Based Capital Model (Prism FBM) score was 'Strong', based on its 3Q15 financials. Its Prism FBM score has dropped one level from 'Very Strong' based on its 2014 financials mainly due to the hike of its insurance liabilities, resulting from the lower interest rate. Nevertheless, the company is still well-capitalised. Fitch expects that MTL's 2016 results will place it in the 'Strong' range. In particular, MTL's Prism FBM results are supported by a high level of equity capital. Its capital ratio based on risk-based capital (RBC) was 423% at end- 3Q15, which was well above the regulatory minimum of 140%.

MTL continues to invest in high quality assets, mainly fixed-income instruments, which accounts for 85% of invested assets. The majority of its fixed-income investments are issued by governments and state enterprises. Investments in equities are maintained at less than 10% of invested assets.

MTL's financial performance remains solid, underpinned by its solid franchise, prudent pricing policy and sound investment income. The company's 3Q15 annualised pre-tax return on assets was 3.8% and compares well with that of its local and regional peers.

MTL is the market leader in premiums written through bancassurance channels with a 27.7% market share in the first 11 months of 2015. In this time, its market share by gross premiums written increased to 16.8% from 14.9% in 2014.

RATING SENSITIVITIES
Key triggers that could lead to a downgrade include a drop in MTL's RBC ratio to below 250% for an extended period and a decline in profitability as reflected in MTL's pre-tax return on assets sustained at below 1%. In addition, a deterioration under the Prism FBM measure of capital could be a catalyst for future negative rating pressure.

If Thailand's Long-Term Local-Currency IDR of 'A-' with a Stable Outlook were downgraded, MTL's IFS rating would likely be lowered.

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