HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long -Term Issuer Credit Rating of “a-” of The People’s Insurance Company of China (Hong Kong), Limited (PICC HK) (Hong Kong). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect PICC HK’s solid risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which improved in 2016 as the company de-risked its investment portfolio by focusing on investment-grade bonds and blue chip stocks. The ratings also recognize the implicit and explicit support that PICC HK receives from its parent, The People’s Insurance Company (Group) of China Limited (PICC Group), in terms of business and capital support. PICC Group owns 75% of PICC HK, while Asia Insurance (Investment), Ltd. owns the other 25%.
As PICC Group’s sole overseas subsidiary, PICC HK plays a strategic role in the group’s overseas development. The company has generated a stable stream of premiums by writing inward business, which includes facultative and treaty business, as well as whole account quota share from its affiliate, PICC Property and Casualty Insurance Company Limited (PICC P&C), the largest non-life insurance company in China.
Offsetting rating factors include the company’s limited presence in Hong Kong’s non-life insurance market and the narrow profit margin on inward business from PICC P&C, which could put some pressure on PICC HK’s underwriting profitability.
Positive rating actions may occur if PICC HK can achieve substantial improvement in its risk-adjusted capitalization and market profile, while maintaining a favorable trend in operating performance. Negative rating actions could occur if PICC HK’s operating results deteriorate significantly, resulting in a material decline in risk-adjusted capitalization. A reduced level of support from the PICC Group, or deterioration in the PICC Group’s credit profile, also may exert negative rating pressure.
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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