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The insurer will complete a significant portion of its IT investments by the first quarter of 2024.
Information and technology investments in the upcoming year will impact the overall profitability of FWD General Insurance, Fitch Ratings said.
The insurer’s rating affirmation is based on the group’s strong capitalisation, low financial leverage, moderate company profile, and low investment risk.
FWD GI experienced a decline in financial performance in 2022 versus 2021.
The combined ratio increased from 90% in 2021 to 106% in 2022, primarily due to higher expenses related to IT investments.
Despite a moderate increase in gross written premiums by 2% year-on-year (YoY), the expense ratio adversely affected the overall profitability.
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The average combined ratio for the period of 2020-2022 was 94% (2019-2021: 89%), which is still below the recommended ratio for ‘BBB’ IFS Ratings.
Fitch Ratings anticipates that the insurer will complete a significant portion of its IT investments by the first quarter of 2024.
The company has been gradually reducing its less profitable employee compensation business and aims to completely exit the group medical business by the end of 2024.
Fitch Ratings anticipates that the overall risk retention rate will rise following the transfer of the group medical business.