A.M. Best Affirms Ratings of Hong Leong Insurance (Asia) Limited

HONG KONG--()--A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Hong Leong Insurance (Asia) Limited (HLIA) (Hong Kong). The outlook for both ratings is stable.

The rating affirmations reflect HLIA’s strong risk-adjusted capitalization, consistently favorable operating performance and sound liquidity. HLIA’s capital and surplus has registered healthy growth in the five-year period from 2010 to 2014, primarily driven by its profitable underwriting performance. Management initiatives to enhance the cost efficiency of its business platform have improved the expense ratio. The ratings of HLIA also recognize its unique business feature of acquiring business through the direct distribution channel, with a focus on short-tail business consistently accounting for approximately two-thirds of the company’s insurance book over the past five years.

Partially offsetting these positive rating factors is HLIA’s exposure to investment risks. HLIA has maintained a modest five-year average investment yield due to volatility in capital gains/losses over the past five years, which was largely driven by the company’s dynamic investment strategy.

Other offsetting factors are competitive market conditions in Hong Kong and HLIA’s relatively high expense ratio. Acquisition of market share remains a challenge for HLIA and the effectiveness of the enhanced business platform will be proven over the medium term.

Factors leading to positive rating actions include continuing improvement in HLIA’s risk-management strategy to mitigate its investment volatility and cost-efficiency management. Alternatively, a declining trend in the company’s Best Capital Adequacy Ratio due to substantial investment losses could result in negative rating action.

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
  • 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.

Contacts

A.M. Best Company, Inc.
Angela Chow, +852-2827-3407
Associate Financial Analyst
angela.chow@ambest.com
or
Jeff Yeung, +852-2827-3413
Associate Director
jeff.yeung@ambest.com
or
Christopher Sharkey, +(1) 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best Company, Inc.
Angela Chow, +852-2827-3407
Associate Financial Analyst
angela.chow@ambest.com
or
Jeff Yeung, +852-2827-3413
Associate Director
jeff.yeung@ambest.com
or
Christopher Sharkey, +(1) 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com