AM Best Affirms Credit Ratings of Luen Fung Hang 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 Luen Fung Hang Insurance Company Limited (LFH) (Macau). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect LFH’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.

LFH’s risk-adjusted capitalisation remained at the strongest level at year-end 2024, as measured by Best’s Capital Adequacy Ratio (BCAR). The company has maintained organic growth in capital and surplus over the past few years through profit retention. LFH’s investment strategy remains conservative, with a majority of its investment portfolio composed of bonds, fixed deposits, and cash and cash equivalents. Other supporting factors include low underwriting leverage and prudent reinsurance arrangements.

LFH’s operating performance remained strong in 2024, attributable to its strong underwriting profitability and stable investment income. While the company’s gross premiums written (GPW) were flat in 2024, its underwriting results stayed highly profitable, with a lower-than-industry-average loss ratio and moderate expense ratio. Over the past five years (2020 to 2024), LFH’s average combined ratio was 60.1%. Additionally, its prudent investment strategy has secured a stable stream of interest and dividend income.

AM Best assesses LFH’s business profile as neutral. LFH remains the second-largest non-life insurer in Macau, with a market share of over 20% based on domestic GPW in 2024. The company continues to benefit from the distribution support from its bank shareholders and maintains a competitive edge in securing high-quality business via its bancassurance channel. LFH’s underwriting portfolio remains moderately diversified, with premiums mainly concentrated in fire and medical lines. A partially offsetting factor is the company’s geographic concentration in Macau.

LFH is well-positioned for its current ratings. Negative rating actions could occur if its risk-adjusted capitalisation experiences significant deterioration, for example, due to unexpected large underwriting or investment losses, or if its operating performance exhibits a material and deteriorating trend in profitability such that it no longer supports a strong assessment. Although unlikely in the intermediate term, positive rating actions could occur if LFH achieves sustained improvement in its operating performance while maintaining a robust level of risk-adjusted capitalisation.

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.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2025 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.