HONG KONG--(BUSINESS WIRE)--
A.M. Best Co. has assigned a financial strength rating of A
(Excellent) and an issuer credit rating of “a” to BOC Group Life
Assurance Company Limited(BOCG Life) (Hong Kong). The outlook for
both ratings is stable.
The ratings reflect BOCG Life’s business collaboration and support from
Bank of China Limited (BOC) and its subsidiaries, one of the largest
state-owned banking groups in China. The BOC group provided capital
support to BOCG Life in 2008-2009. BOCG Life’s products are distributed
through a wide banking network and customer base of the group in Hong
Kong with low expenses and acquisition costs.
BOCG Life demonstrates high efficiency to implement its business
strategy. Since 2008, the company’s sales have grown rapidly to make it
the top insurer in the non-investment-linked market with over 20% market
share of new business in Hong Kong in the past two years. The company
has improved its flagship endowment products to gradually increase the
value of business. Management also implemented many proper measures to
enhance asset and liability management for reducing volatility in its
The dominating position of BOCG Life in the fast-growing domestic
Renminbi (RMB) life insurance market is also a positive rating factor.
The product innovation with advantages in onshore RMB investment
channels will continue to contribute to the company’s growth in this
sector. The large business volume also enables BOCG Life to have
favorable negotiations with business partners.
These positive rating factors are partially offset by BOCG Life’s thin
buffer level in its statutory solvency ratio. Although measures were in
place to decrease volatility in the solvency ratio, the solvency ratio
maintained in BOCG Life was lower than its peers. The major portion of
business from savings products also led to a low profit margin and large
exposure to market risk, compared with long-term protection and
investment-linked products. Unexpected or extreme market events may
materially reduce capital adequacy. The current historical low interest
rate environment also created challenges for the company to maintain its
target investment yield and to develop longer-term products with better
value of business. It will take more time for BOCG Life to balance the
product package further.
While the ratings for BOCG Life are stable, positive rating actions may
result from enhanced profitability of new business with greater product
diversity, in conjunction with strengthened risk-adjusted
capitalization. However, downward rating pressure could arise if there
is a significant deterioration in the company’s risk-adjusted
capitalization in the event of adverse financial market movements.
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. Key criteria utilized include:
“Understanding Universal BCAR” and “Risk Management and the Rating
Process for Insurance Companies.” Best’s Credit Rating Methodology can
be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS
A.M. Best Co.Michael Wong,+852-2827-3418Senior
Morrow, +(1) 908-439-2200, ext. 5378Senior Manager, Public
Peavy, +(1) 908-439-2200, ext. 5644Assistant Vice
President, Public Relationsjames.firstname.lastname@example.org
Source: A.M. Best Co.