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The Hollard Insurance Company Limited (“THIC”) is the group’s core operating entity contributing 57.5% of gross premiums in FY20, anchoring the group’s competitive position. Hollard Life Assurance Company Limited contributed 34.1% of gross premiums in FY20, and together with ancillary specialist business units provides credit stabilising diversification. Despite the escalation in earnings and liquidity risks due to contingent business interruption (“CBI”) and mortality claims, the rating factors in the group’s capacity to absorb a level of near-term stress.
The group’s intermediate liquidity is supported by strong liquidity metrics in the life business, given high capital buffers relative to insurance liabilities. However, potential liquidity pressures from risky assets in the short-term business present risks to the factor’s assessment. Going forward, GCR expects liquidity metrics to remain within the current range, albeit sensitive to the combined impact of dividend payments and possible operating cash flow volatility over the short term.