CJH Financial Planning

This is a follow-up from a post 3 years ago , where I compiled the credit ratings of the life insurers in Singapore, to have an idea of the differences in terms of their credit worthiness. Flawed Assumption People often think that life insurers and the policies they issue are homogeneous (the same), and often compare benefit illustrations as if two companies are going to make the exact same amount of profits, exact same amount of investment returns, have the exact same amount of business operating costs, and et cetera. How far away from the truth that flawed assumption can be.  Every life insurer holds a different asset mix in their insurance funds, and have different profits/returns/costs. Even their shareholders may demand a different dividend rate on their shares. Therefore it is not surprising that life insurers with larger assets and bigger operations in Singapore tend to be the ones rated higher by Standard and Poors (S&P), one of the foremost rating agency in th...

I got curious about the different credit ratings across Singapore's life insurer and started to compile the data. Here is the result of my curiosity. Standard and Poors (S&P) is one of the top three credit rating agencies in the world (alongside Fitch and Moody's) and their opinion is highly regarded in the financial and economic world. The ratings are a reflection of S&P's opinion on how likely a company is able to meet its financial obligations. In the context of insurance companies, that means the policy payouts and cash values. To give a better perspective of the credit worthiness, all three local banks (DBS, UOB, OCBC) are rated AA- ( http://www.straitstimes.com/business/banking/dbs-ocbc-uob-get-aa-credit-rating-from-sp ). In the case of the latest entrant in the market (FWD Singapore), it's apparent that their credit rating is way lower than the other more established brands.  (Note that FWD's rating is by Fitch, which runs on an equivalent sca...