S&P maintains 2 Thai insurers on Credit Watch
Bangkok Insurance Plc and Dhipaya Insurance Plc's 'A-' local currency long-term counterparty credit rating and insurer financial strength rating remains on Standard & Poor's Ratings Services' credit watch with negative implications.
In a statement released on Feb 22, the rating company said that the earnings and capital positions of both companies may weaken further if the estimated losses from the recent severe flooding in Thailand materially exceed their current reinsurance cover.
Both insurers have significant exposure to industrial all-risk and fire classes of business; industrial all-risk insurance policies cover floods while only some fire insurance policies have flood coverage.
"We expect the two companies will incur a material portion of the mounting losses, and this could affect their earnings or capital position," said Standard & Poor's credit analyst Paul Clarkson. "We do not believe the full extent of the losses will be known until at least the second quarter of this year."
Standard & Poor's aims to resolve the CreditWatch status over the next three months after getting more clarity on the losses. The ratings could be lowered by one notch or more, depending on the severity of the loss to the companies' reinsurance programme and capital base.
