HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a” of Sun Hung Kai Properties Insurance Limited (SHKPI) (Hong Kong). The outlook for both ratings remains stable.
The rating affirmations reflect SHKPI's favorable risk-adjusted capitalization, as measured by the Best Capital Adequacy Ratio (BCAR), and strong operating performance that supports organic growth in capitalization. The ratings also recognize SHKPI’s business profile as being a wholly-owned subsidiary of the much larger Sun Hung Kai Properties Limited (SHKP), a leading property development and investment conglomerate based in Hong Kong. SHKPI has a relatively secure and stable source of premium income derived from the construction and non-construction business activities undertaken by SHKP that requires minimal acquisition costs. The company's investment portfolio is managed under the investment arm of SHKP, which has demonstrated a track record of consistently good investment returns for SHKPI over the past five years.
These positive factors are partially offset by the potential volatility in risk-adjusted capitalization due to SHKPI’s relatively high concentration in a small number of non-investment grade bonds within its bond portfolio.
SHKPI is well-positioned at its current rating level. Negative rating pressure may occur if the company demonstrates significant and continued deterioration in underwriting results or a major investment loss that leads to a substantial decline in its risk-adjusted capitalization.
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
- Evaluating Non-Insurance Ultimate Parents
- 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.
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