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 balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also reflect the lift the company receives from its parent, The People’s Insurance Company (Group) of China Limited (PICC Group).
PICC HK is well-capitalized as measured by Best’s Capital Adequacy Ratio (BCAR). Capital and surplus grew during the past five years through partial retention of net profits, and the capital position was further strengthened in 2017 due to the capital injection of HKD 140 million from its two shareholders, PICC Group and Asia Insurance (Investment), Ltd., which own 75% and 25% of PICC HK, respectively.
As PICC Group’s sole overseas subsidiary, PICC HK plays a strategic role in the group’s overseas development. In addition to capital support provided by the group, PICC HK also benefits from underwriting inward treaty from its affiliated company, PICC Property and Casualty Insurance Company Limited (PICC P&C), which contributes a significant volume of business to the company’s book.
Offsetting rating factors include PICC HK’s limited business profile, as reflected by its small presence in Hong Kong’s non-life insurance market. The company mainly writes commercial lines business in the competitive domestic market under a prolonged soft market environment.
Positive rating actions may occur if PICC HK can improve its business profile significantly while maintaining adequate operating performance and risk-adjusted capitalization at a very strong level. Negative rating actions could occur if PICC HK’s operating performance deteriorates significantly and erodes its risk-adjusted capitalization. A reduced level of support from the PICC Group, or deterioration in the group’s credit profile may also bring negative rating pressure on PICC HK.
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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