United Overseas Insurance’s focus on Singapore market yields stable earnings

UOI's balance sheet strength is supported by its risk-adjusted capitalisation.

Singapore’s United Overseas Insurance’s (UOI) balance sheet remains sturdy thanks to robust operating performance, neutral business profile, and effective enterprise risk management. 

UOI's balance sheet strength is supported by its risk-adjusted capitalisation, which is expected to stay at the strongest level over the medium term, as measured by AM Best's Capital Adequacy Ratio (BCAR). 

The company has shown solid internal capital generation, with shareholders' equity rising by 5.9% in 2023, attributed to unrealised investment gains and internal capital growth. 

The investment portfolio consists mainly of high-quality fixed-income securities, cash, and deposits, with moderate exposure to equity investments. 

The company's reliance on reinsurance to underwrite large risks is seen as a factor that balances its sheet strength, though AM Best views the reinsurance management strategy as effective in reducing balance sheet volatility.

UOI's operating performance is considered very strong, marked by consistent and profitable underwriting results, contributing to stable overall earnings. 

The company reported a 55% increase in net profit in 2023, driven mainly by improved investment returns. The underwriting performance remained profitable, with a low loss ratio and favourable reinsurance commissions.

As the sole insurance subsidiary of UOB, UOI benefits from cross-selling opportunities through the bancassurance channel. UOI's underwriting portfolio is primarily focused in Singapore, with approximately 75% of gross premiums sourced locally. 

Future regional business expansion is expected to align with the group's broader strategy.