HONG KONG--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of China Taiping Insurance (HK) Company Limited [CTPI(HK)] (Hong Kong). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect CTPI(HK)’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
CTPI(HK) continues to maintain robust risk-adjusted capitalization, supported by an organic accumulation of retained earnings, an improving quality of investment assets, prudent reserving practices and comprehensive reinsurance programs.
CTPI(HK) has demonstrated a track record of positive underwriting results over the past five years, despite thin profit margins. Investment assets continue to provide the company a stream of stable and favorable returns through interest, rental and dividend income. Over the short to intermediate term, AM Best expects the company’s operating performance to remain highly dependent on its investment performance, while underwriting profitability can be maintained at a stable, yet low level.
CTPI(HK) benefits from its long operating history, brand recognition and business relationships with clients, in particular Sino-based enterprises and distribution partners in Hong Kong. The company ranked third in Hong Kong’s non-life insurance market based on gross premium written in 2018, and remained a leading player in key business lines including motor, property damage, statutory general liability and marine insurance. While agents and brokers are the major source of premium revenue, the company aims to diversify its distribution network by developing a direct sales team and reinforcing its bancassurance channel.
Offsetting rating factors include investment concentration risks associated with unlisted funds and investment properties, as well as the prolonged intense market competition.
Positive rating actions are unlikely in the near term. Negative rating actions could occur if there is a trend of material deterioration in the company’s operating results, or if there is a material decline in CTPI(HK)’s risk-adjusted capitalization.
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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