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Fitch Ratings-Taipei/Hongkong/Singapore-29 July 2009: Fitch Ratings has today said that Shin Kong Financial Holding Co. Ltd.'s successful completion of its new share issue of TWD13.1bn (29.7% of its equity at end-Q109) will help strengthen the balance sheet of its wholly-owned Shin Kong Life Insurance Company Ltd (SKL). The proceeds of the fundraising are to be used solely to add to SKL's capital.
In Fitch's view, the capital enhancement deed is essential to restore SKL's capitalisation to an adequate level. However, the agency remains concerned that prevailing extremely low TWD interest rates will continue to pressure Taiwanese life insurers' (including SKL) already significant negative interest carry and earnings performance. This could potentially offset the benefits of the new capital increase.
SKL's Insurer Financial Strength (IFS) rating and National IFS rating remain at 'BB+' and 'A-(twn)', respectively. The Outlook on the ratings is Negative.
Contacts: Joyce Huang, Jonathan Lee, Taipei, +886 2 8175 7600.
Note to editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(twn)' for National ratings in Taiwan. Specific letter grades are not therefore internationally comparable.
Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6796 7215,
Email:
shivani.sundralingam@fitchratings.com.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. The issuer did not participate in the rating process other than through the medium of its public disclosure.
