Pandemic insurance claims to drag Cathay Century’s operating results: AM Best

However, the ratings firm said this is a one-off event for the insurer.

Pandemic insurance claims will negatively impact Cathay Century Insurance Company Limited’s operating results in 2022, AM Best said.

However, the insurance-focused ratings firm said that it views the negative impact as a one-off event and that Cathay Century should be able to recoup its losses over the short to intermediate term, as demonstrated by its track record of consistently stable and profitable net earnings over the past years.

“In particular, Cathay Century’s major business line of voluntary motor has contributed to an improving underwriting margin supported by better pricing and the company’s continued effort in refining the risk quality and product composition,” AM Best said.

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In early 2022, Cathay Century was just one of the many insurers negatively impacted by a significant increase in claims resulting from a sudden surge of COVID-19 infections in April.

On 24 June 2022, the company received a capital injection of $310m from its parent, Cathay Financial Holding Co., Ltd. (Cathay Financial Holding). 

“The ultimate losses remain uncertain at this stage as the pandemic insurance policies are expected to fully run off by 2023. However, AM Best expects Cathay Century’s risk-adjusted capitalisation to remain at the strongest level over the short to intermediate term, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by the capital injection and continued organic growth through profit retention from non-pandemic traditional insurance business and investments,” AM Best said.