Alongside this upgrade, Moody’s also raised the insurance financial strength ratings (IFSR) of FWD Life Insurance Company (Bermuda) Limited and FWD Reinsurance SPC, Ltd to A2 from A3, with outlooks also adjusted to stable. Both are wholly owned subsidiaries of FWD Group.
The improved ratings reflect strong performance across FWD’s four key markets, each of which has reported positive operating profits since 2023, with continued growth in 2024. In Q1 2025, the group recorded a 32% year-on-year increase in value of new business (VNB) and a 55% jump in new business contractual service margin (NB CSM).
Expense management has also improved, as FWD has scaled up, reducing embedded value operating expenses and commission variances in both 2023 and 2024. Enhanced operating assumptions are expected to bolster the sustainability of future profit, and continued deleveraging is helping contain financing costs.
As of end-2024, FWD’s Group-Wide Supervision (GWS) coverage ratio stood at 260% of the prescribed capital requirement, indicating a robust capital position. The company’s main operating entities also maintained strong local solvency ratios and increased net capital remittances to the group through mid-2025.
A significant milestone came in July 2025, when FWD Group successfully listed on the Hong Kong Stock Exchange, raising approximately $442 million – equivalent to 6.5% of its 2024 year-end shareholders’ equity. The listing has strengthened its capital buffer and improved access to capital markets.
Moody’s expects the group’s earnings and capital generation to improve over the next 12 to 18 months, supported by its growing in-force business, better cost efficiency, and favorable interest rate conditions. The company’s multichannel distribution strategy, expanded bank partnerships, and diversified product suite have also strengthened its market position in the region. Its investment portfolio remains conservatively managed, with over 80% allocated to fixed income, and more than 90% of corporate bond holdings rated investment grade.
Nonetheless, some challenges remain. FWD has a weak historical earnings track record and low interest coverage due to upfront expenses associated with growth. Despite improvements, Moody’s does not expect material changes in earnings coverage in the short term, given ongoing financing costs. Furthermore, the group’s growing presence in emerging markets such as Thailand, Indonesia, and Vietnam adds operational complexity and risk.
Moody’s notes that the group’s A2 notional IFSR is two notches above its Baa1 issuer rating, reflecting the subordination of holding company debt to policyholder obligations. The smaller-than-usual two-notch differential is due to Hong Kong’s Group-wide Supervision (GWS) regime, which enhances group-level regulatory oversight and capital deployment.
The upgrades to FWD Life HK and FWD Re’s A2 IFSRs mirror the parent group’s enhanced credit profile. FWD Life HK has grown its market share in Hong Kong through a multichannel strategy and strong agency productivity, benefiting from premium growth across both local and mainland Chinese customer segments. FWD Re’s upgrade reflects its role as a core, captive reinsurer within the group.
The stable outlook across the group and its subsidiaries reflects Moody’s expectation that FWD will continue to improve profitability and reduce financial leverage while maintaining strong capitalization.
Moody’s noted that further upgrades are possible if FWD achieves a return on capital above 6% sustainably, improves earnings coverage beyond 4x, continues deleveraging, and sustains a capital coverage ratio above 200%. Conversely, ratings could be downgraded if profitability deteriorates, capital ratios weaken, financial leverage rises, or market access is impaired.
