2013-12-20 17:35:04 -
A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit ratings of “a” of China Taiping Insurance (HK) Company Limited (CTPIHK) (Hong Kong). The outlook for the ratings remains stable.
The ratings reflect CTPIHK’s strong risk-adjusted capitalization, historically favorable operating results and stable market presence within the general insurance market in Hong Kong. CTPIHK is one of the key operating entities within China Taiping Insurance Holdings Company Limited (CTIH), and benefits from the brand recognition as well as investment and reinsurance support from CTIH.
CTPIHK’s capital and surplus remained solid, with net premium leverage standing at a conservative level despite robust premium growth recorded in 2012. The company’s underwriting results further improved, mainly through the increase in
premium rates on employees’ compensation (EC) and commercial motor business, in addition to the continued tightening of selected EC underwriting policies during the year.
Partially offsetting these positive rating factors are the continued demand for capital and solvency support from CTIH and its affiliates, and potential earnings volatility arising from CTPIHK’s exposure in the Hong Kong property market, given that revaluation profit from investment properties had been a key contributor to profitability. Additionally, CTPIHK has recently begun reinsuring motor business written from a Mainland China-based affiliate, Taiping General Insurance Co., Limited (TGI). This business is expected to materially increase from the current level of approximately 25% of CTPIHK’s total gross premium written over the next two to three years.
While CTPIHK is well positioned at its current rating level, negative rating actions could occur if the results from the assumed motor book were to adversely impact operating profitability trends, or if there were a material dividend payout to CTIH and/or a significant deterioration in risk-adjusted capitalization.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
A.M. Best Asia-Pacific Limited is a subsidiary of A.M. Best Company. A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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