AM Best Affirms Credit Ratings of CMB Wing Lung Insurance Company Limited

HONG KONG--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of CMB Wing Lung Insurance Company Limited (CMBWLI) (Hong Kong). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect CMBWLI’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

CMBWLI’s very strong balance sheet strength assessment is underpinned by its robust risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). Following the general business transfer from China Merchants Insurance Company Limited in December 2022, and the material capital injection from China Merchants Insurance Holdings Company Limited in June 2023, the company’s capital and surplus (C&S) increased significantly to HKD 3.1 billion as of year-end 2023. Based on the unaudited financial statements, CMBWLI’s C&S grew further in 2024, supported by its positive operating results and partial profit retention. CMBWLI maintains a prudent investment strategy, the cash and cash equivalents remain as its largest asset types. Additionally, the insurer continues to enhance the credit quality of its bond investments, while maintaining a limited exposure on other risky assets.

CMBWLI’s overall operating performance has been consistently strong and better than the market, as evidenced by high-single-digit returns on equity in 2023 and 2024. Net earnings continue to be supported by profitable underwriting results and a steady stream of investment income. The company’s investment performance was enhanced in 2024, owing to favorable interest income.

As a medium-sized non-life insurer in Hong Kong, CMBWLI is one of the major market players in the employees’ compensation (EC) segment. The company’s product mix remains diversified, with EC, motor and property damage making up the bulk of its business. The company expects further growth in the marine segment, and it is seeking for opportunities in terms of inward property damage outside Hong Kong.

Negative rating actions could occur if there is a continued deteriorating trend or an increased level of adverse volatility in CMBWLI’s operating performance, due to adverse underwriting results or investment losses. Negative rating actions also could arise if there is a significant deterioration in the company’s risk-adjusted capitalisation driven by material underwriting or investment losses. Although it is unlikely in the near term, positive rating actions could occur if there is a material and sustained improvement in CMBWLI’s risk-adjusted capitalisation, while the company maintains its strong operating performance.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM 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 see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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