[January 22, 2015]

A.M. Best Affirms Ratings of South China Insurance Co., Ltd.

A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of "a-" of South China Insurance Co., Ltd. (South China Insurance) (Taiwan). The outlook for South China Insurance's ratings remains positive.

The rating affirmations reflect South China Insurance's sound risk-adjusted capitalization, stable track record of underwriting results and its diversified distribution channels. The positive outlook reflects the company's consistently favorable underwriting performance and improved market presence in Taiwan's non-life insurance market over the past five years. The ratings and outlook also recognize the company's demonstrated improvement in risk management capability.

South China Insurance has adopted a successful multi-channel strategy, including direct distribution, agents and brokers, as well as a secured affiliated channel of Hua Nan Financial Holdings Co. Ltd. The company has strengthened ties with car dealers in recent years, which enhanced growth in its voluntary motor line and improved its overall ranking in Taiwan's non-life market to sixth in June 2014, compared to eighth in 2009.

These positive rating factors were partially offset by investment losses in years 2008 and 2011, and exposure to natural catastrophes within the region as business volume increased. Furthermore, Taiwan's competitive market conditions are expected to continue to challenge the company's business growthand underwriting profitability.

Positive rating actions may occur if South China Insurance can consistently demonstrate favorable underwriting performance and strong risk-adjusted capitalization, as measured by the Best's Capital Adequacy Ratio (BCAR). The rating or outlook could be revised downward if there is a material deterioration in the company's BCAR, for example due to a large dividend payout.

The methodology used in determining these interactive ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

• Catastrophe Analysis in A.M. Best Ratings
• Evaluating Non-Insurance Ultimate Parents
• Insurance Holding Company and Debt Ratings
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding Universal BCAR

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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