Standard & Poor's Ratings Services placed its 'A-' financial strength and local currency issuer credit ratings and 'axAA' ASEAN regional scale ratings on Bangkok Insurance Public Co. Ltd. on CreditWatch with negative implications. The ratings are no longer "under criteria observation."
The CreditWatch placement reflects the reassessment of the impact from a hypothetical sovereign foreign currency default in Thailand on the credit profile of Bangkok Insurance. The 'A-' rating on Bangkok Insurance is now higher than the 'BBB+' foreign currency sovereign credit rating on Thailand.
Based on our criteria, "Ratings Above The Sovereign--Corporate And Government Ratings: Methodology And Assumptions," published on Nov. 19, 2013, for an insurance company to be rated above the relevant sovereign foreign currency rating, the company should be able to pass a hypothetical sovereign foreign currency default stress test.
"We performed a stress test, which hinges on Bangkok Insurance's liquidity and capital, and the likelihood of regulatory intervention; the initial results indicate that Bangkok Insurance may not be able to pass," said Standard & Poor's credit analyst Philip Chung.
We aim to resolve the CreditWatch placement in the next three months. We will further assess the company's liquidity and capital positions, and the likelihood of regulatory intervention, after taking into account Bangkok Insurance's current circumstances and future prospects.
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