Fitch Ratings has affirmed
The Outlook is Stable.
The ratings reflect the insurer's 'Very Important' strategic role for its owner
Key Rating Drivers
'Very Important' to Chinese Parent: TPUK's rating reflects its ownership by TPG, a state-owned Chinese insurance group via
Fitch views TPUK as 'Very Important' to TPG under its group rating methodology, which leads to a three-notch uplift to TPUK's standalone credit quality of 'bbb-'. TPUK is key to TPG's internationalisation strategy as the
Underwriting Loss in 2022: Fitch assesses TPUK's financial performance as weak. In 2022, TPUK reported an underwriting loss of
Fitch expects the ongoing restructuring of its business lines to reduce volatility in TPUK's overall net income and marginally improve underwriting results in the short-to-medium term. However, uncertainty around underwriting performance remains, in our view, given TPUK's planned shift in focus from growth to profitability.
'Least Favourable' Business Profile: Fitch views TPUK's business profile as 'Least Favourable' compared with other
Strong Capitalisation: Fitch's assessment of TPUK's capital strength is driven by its Solvency II (S2) ratio of 151.3% at end-2022 (end-2021: 164.5%). Despite reporting a significant loss of
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
TPUK becoming 'Core' to TPG. However, this is unlikely in the medium term due to financial performance not being in line with TPG's expectations
Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
A reduction of TPUK's strategic importance to TPG. This could result from failure to maintain TPUK's SCR S2 coverage above 150%
A sustained weakening in the combined ratio, excluding pandemic-related losses, to above 120%, leading to a downward revision of TPUK's standalone credit quality
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
RATING ACTIONS
Entity / Debt
Rating
Prior
LT IFS
A-
Affirmed
A-
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