Nice Investors Service Downgrades Fubon Hyundai Life Subordinated Bond Rating to 'A/Stable'

Nice Investors Service has downgraded the subordinated bond credit rating of Fubon Hyundai Life Insurance from 'A+/Negative' to 'A/Stable.' The agency cited increasing burdens in capital management amid weak profitability as the reason for the downgrade. The insurer's claims-paying ability rating was newly assessed at 'A+/Stable.'

In a report released on May 13, Nice Investors Service explained that the downgrade reflects both the expectation that weak profitability will persist due to continued underwriting losses and the growing burden of capital management.

The agency stated, "Although Fubon Hyundai Life Insurance, which has focused on savings-type insurance and retirement pensions, is expanding its protection-type insurance portfolio, visible qualitative improvement is being delayed due to intensified competition within the industry, as well as weaker brand recognition and sales channel competitiveness." The report also pointed out, "In 2023 and 2024, the company's insurance underwriting results were -23.2 billion won and -59.8 billion won, respectively, with its insurance profit ratio falling significantly below the industry average."

Additionally, the agency noted, "Fubon Hyundai Life Insurance's capital base was significantly strengthened through large-scale capital infusions of 458 billion won in 2021 and 392.5 billion won in 2023 from Fubon Life of Taiwan." However, it added, "Due to continued net losses and large-scale losses in other comprehensive income, the company's capital at the end of 2024 is only 486.7 billion won." Fubon Hyundai Life Insurance is a life insurance company under Taiwan's Fubon Financial Group.

Nice Investors Service further stated, "Going forward, factors such as the reduction of transitional relief effects over time, the approaching maturity of capital securities, and the implementation of regulatory reforms related to the enhancement of capital regulations are all expected to increase the burden of capital management." The agency continued, "Key monitoring factors will include the insurance portfolio and market position, profitability, overall capital adequacy, and the level of support from the group," adding, "We will also monitor the capital regulations for the insurance sector by financial authorities and any resulting business or financial changes for the company."