HONG KONG--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to China Merchants Insurance Company Limited (CMI) (Hong Kong). The outlook assigned to these Credit Ratings (ratings) is stable.
CMI is a non-life insurance company that offers personal and commercial lines non-life insurance products in its domestic market. The company’s ultimate parent is China Merchants Group Limited (CMG), a state-owned corporation of the People’s Republic of China that focuses on the transportation, finance and property business sectors.
The assigned ratings reflect CMI’s strong risk-adjusted capitalization after a recent significant capital strengthening of HKD 207 million (USD 27 million), which resulted in a 232% year-on-year increase in capital and surplus as of year-end 2016. With almost 30 years of operating experience, CMI has demonstrated prudent underwriting and reserving practices on the personal line, which is its core book. In addition, CMI’s ratings reflect the explicit support it receives from its ultimate parent, CMG, and the financial flexibility it enjoys from being part of a well-established group.
Offsetting rating factors are weak historical operating performance due to a high management expense ratio and the execution risk of the company’s business transformation plan, which calls for expanding from a personal line focus to a more well-balanced book of business.
Positive rating actions are unlikely in the near term. Negative rating actions may occur if there is material deterioration of CMI’s operating results or risk-adjusted capitalization due to expansion initiatives.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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