AM Best Affirms Credit Ratings of China BOCOM Insurance Company Limited
September 12 2024 - 11:04AM
Business Wire
AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-”
(Excellent) of China BOCOM Insurance Company Limited (CBIC) (Hong
Kong). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect CBIC’s balance sheet strength, which AM Best
assesses as very strong, as well as its adequate operating
performance, limited business profile and appropriate enterprise
risk management. The ratings also reflect the wide range of support
that the company receives from its ultimate parent, Bank of
Communications Co., Ltd. (BOCOM), including capital support, brand
recognition, distribution channel, investment management,
operational and risk management.
CBIC’s very strong balance sheet assessment is underpinned by
risk-adjusted capitalisation that remained at the strongest level
at year-end 2023, as measured by Best’s Capital Adequacy Ratio
(BCAR). The company’s capital and surplus has achieved steady
growth in 2023, supported by full profit retention. The company
also maintains a healthy regulatory solvency position as evaluated
by Hong Kong’s Risk-Based Capital ratio in 2023. Notwithstanding,
investment risk remains an offsetting factor in the balance sheet
strength assessment given the company’s high-risk appetite for
unlisted investments and concentration in a private equity fund
investment. CBIC’s moderately high reinsurance dependency is
another offsetting factor, which is partly mitigated by its prudent
reinsurance arrangements and diversified reinsurance panel.
AM Best views CBIC’s operating performance as adequate. In 2023,
the company achieved moderate growth in insurance services revenue,
while improving bottom-line results. Investment income remains the
key contributor to the company’s net profit, while its underwriting
performance continues to be impacted by high operating expenses
relative to its small premium base.
AM Best assesses CBIC’s business profile as limited. The company
maintains a modest presence in Hong Kong’s highly fragmented
general insurance market. The company’s underwriting portfolio
remains diversified. It also has a diversified distribution network
including bancassurance, brokers, agencies and inward facultative.
As the sole general insurance arm of the BOCOM group, CBIC receives
distribution support from BOCOM’s extensive banking network and
subsidiaries.
Although CBIC’s current ratings are well-placed, negative rating
actions could occur if there is a material deterioration in CBIC's
operating performance, for example, due to a deterioration of
combined ratio or large losses from its unlisted financial assets.
Negative rating actions could also occur if there is a substantial
decline in CBIC’s overall balance sheet strength, for example, due
to heightened exposure to higher risk investments. Positive rating
actions are probable if the company achieves sustained improvement
in its operating performance that is superior to market peers.
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.
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Aaron Li Associate Financial Analyst +852 2827
3426 aaron.li@ambest.com Lucie Huang Senior Financial
Analyst +852 2827 3414 lucie.huang@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310 christopher.sharkey@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com