2013-09-06 18:03:01 -
A.M. Best Asia-Pacific Limited has revised the outlook to positive from stable and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Blue Cross (Asia-Pacific) Insurance Limited (Blue Cross) (Hong Kong).
The ratings reflect Blue Cross’ solid risk-adjusted capitalization and sound business profile as one of the top five insurers in the accident and health insurance market in Hong Kong in terms of gross premiums written.
The revised outlook is based partly on Blue Cross’ track record of favorable operating performance, which has consistently improved its capital position, as well as the expectation of a downsized investment risk upon the maturity of a vast portion of its legacy endowment products from its run-off life portfolio from
2014 onward. The company consistently generates positive underwriting income from a quality book of medical insurance business and has taken initiatives to improve its distribution cost and efficiency. While Blue Cross’ overall investment performance was negatively impacted by investment impairment losses during the global financial crisis of 2008, investment earnings have been largely supported by a steady stream of interest and dividend income since 2009.
Partially offsetting these positive rating factors is the continued competitive environment within the medical insurance market by price competition and medical cost inflation. The overall capital and surplus continues to be exposed to potential volatility due to investment risk in relation to its run-off life portfolio. Blue Cross is expected to maintain a satisfactory capital position on a statutory solvency basis over the next three years. However, the high dividend payout anticipated in the next three years may slow down future capital growth of the company.
Positive rating actions could occur if Blue Cross manages to sustain its current favorable underwriting and investment results while maintaining strong risk-adjusted capitalization.
However, downward rating pressure could occur if the company’s operating performance and/or risk-adjusted capitalization decline significantly.
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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