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 Starr Property & Casualty Insurance (China) Company, Limited (Starr China) (China). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Starr China’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.
The ratings also reflect the business and operational support from Starr International Company, Inc. (SICO) and its insurance subsidiary, Starr Insurance & Reinsurance Limited (SIRL), a company within SICO that is a 20% shareholder of Starr China. Starr China also assumes overseas treaty business ceded from the group, which has been a key contributor to gross premium written and underwriting income in 2017.
Starr China had restructured its underwriting portfolio to focus on domestic commercial and specialty risk business. Operating profitability improved substantially, as the company ceased underwriting motor business to reduce operating cost. The company reported positive operating profit since 2014, with the after-tax profit fully retained to strengthen the company’s capitalization for future business growth.
Offsetting rating factors are the challenge for Starr China to achieve the expected underwriting profitability from the new commercial portfolio in light of the increased competition in China’s non-life insurance market, as well as the increasing exposure to tail risk and potentially higher severity risk arising from the expansion into liability and specialty lines of business.
Negative rating actions could occur if the company reports a continued and material adverse deviation from its business plan, a significant decline in the risk-adjusted capitalization, or a reduced level of support provided by SIRL or SICO.
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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