HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a” of China Taiping Insurance (HK) Company Limited (CTPIHK) (Hong Kong). The outlook for both ratings remains stable.
The ratings reflect CTPIHK’s excellent risk-adjusted capitalization, strong market presence in Hong Kong’s non-life insurance market and consistent operating profits over the past five years.
CTPIHK’s risk-adjusted capitalization level, as reflected by its Best’s Capital Adequacy Ratio (BCAR), is strong and supportive of its current ratings, despite its strong premium growth in the past two years. With a long operating history in Hong Kong’s non-life insurance market and as one of the major Chinese insurers in Hong Kong, CTPIHK has maintained a well-established market presence. CTPIHK is the fifth largest non-life insurer in Hong Kong based on 2013 premium written and has consistently recorded strong investment earnings. Underwriting performance has also stabilized after the 2010 sale of the loss-generating subsidiary in mainland China.
An offsetting rating factor is the unfavorable underwriting results in its motor and employees’ compensation (EC), two major portfolios for CTPIHK that continue to face pricing pressures under soft market conditions. Another offsetting factor is the potential earnings volatility arising from CTPIHK’s exposure in the Hong Kong property market, an area in which any adverse movement could have an unfavorable impact on CTPIHK’s operating performance.
Future positive rating actions could occur if CTPIHK continues to improve its underwriting performance and further enhances its risk management practice while maintaining its strong risk-adjusted capitalization level. Conversely, negative rating actions could occur if CTPIHK’s operating performance deteriorates significantly, or there is a material decline in its capitalization level from a material dividend payout.
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
• Insurance Holding Company and Debt Ratings
• Rating Members of Insurance Groups
• 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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