AM Best Affirms Credit Ratings of United Overseas Insurance Limited

AM Best has affirmed the Financial Strength Rating of A+
(Superior) and the Long-Term Issuer Credit Rating of “aa-” of United
Overseas Insurance Limited (UOI) (Singapore). The outlook of these
Credit Ratings (ratings) remains stable.

The ratings reflect UOI’s balance sheet strength, which AM Best
categorizes as very strong, as well as its very strong operating
performance, neutral business profile and appropriate enterprise risk
management (ERM). In addition, the ratings factor a positive impact from
the company’s ultimate majority ownership by United Overseas Bank
Limited (UOB).

UOI’s balance sheet strength is underpinned by its risk-adjusted
capitalization, which AM Best expects to remain at the strongest level
over the medium term, as measured by Best’s Capital Adequacy Ratio
(BCAR), supported by controlled underwriting growth, a balanced
investment strategy and strong internal capital generation. Over the
past five years, consistently strong retained earnings have enabled the
company to grow reported shareholders’ equity to SGD 378 million in
2018, from SGD 303 million in 2014.

The company has a track record of very strong operating performance, as
evidenced by a five-year average combined ratio of 49% and an operating
ratio of 21% (2014-2018). Excellent underwriting performance has been
driven by very favorable loss ratios emanating from the company’s
targeted underwriting approach and access to affiliated bank channel
business from UOB. Technical results in recent years also have benefited
from significant inward commissions, reflecting the strong performance
of business ceded to reinsurers. Consistent and favorable investment
income, arising from the company’s large invested asset base, also has
been a key contributor to overall earnings. Prospectively, AM Best
expects UOI’s key performance metrics to continue exceeding those of its
non-life insurance peers in Singapore.

AM Best views UOI as having a strong competitive position in its key
business lines as the sole insurance subsidiary of UOB. UOI’s
affiliation with its banking parent enables good access to business
through the bancassurance channel, as well as a strong brand and
reputation to trade upon in other target segments. UOI’s underwriting
portfolio remains focused predominantly in Singapore, with the company
expected to approach regional growth cautiously and remain centered on
opportunities arising in connection with UOB’s regional operations.

The company has a developed ERM framework, which AM Best considers
appropriate for the size and complexity of UOI’s operations. Risk
management capabilities are robust and typically viewed as adequate,
relative to the company’s core risks.

Ratings are communicated to rated entities prior to publication.
Unless stated otherwise, the ratings were not amended subsequent to that
communication.

This press release relates to Credit Ratings that have been published
on AM Best’s website. For all rating information relating to the release
and pertinent disclosures, including details of the office responsible
for issuing each of the individual ratings referenced in this release,
please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media - Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
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