A.M. Best Removes From Under Review With Negative Implications and Affirms Credit Ratings of Luen Fung Hang Insurance Company Limited
On
The removal of the under review status follows AMCM’s recent formal approval to waive some of these requirements. For the ceded portion of technical reserves arising from Typhoon Hato, which amounted to almost MOP 400 million, LFH is no longer required to pledge assets to guarantee those reserves, provided that the reinsurance counterparties have satisfactory credit profiles.
The ratings reflect LFH’s balance sheet strength, which
LFH’s balance sheet strength is supported by its risk-adjusted capitalization being at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR). This result mainly reflects its low underwriting leverage, prudent reinsurance program and conservative investment allocation.
Operating performance also has been strong and consistent, with key operating metrics generally outperforming its peer averages. Over a five-year period, LFH’s underwriting and investment results have been consistently positive, contributing to an average combined ratio of under 75% and an average operating ratio of below 65%. While underwriting results for fiscal year 2018 may be affected by the potential losses in relation to Typhoon Mangkhut,
LFH continues to maintain a market leading position in
The stable outlooks reflect A.M. Best’s expectation that LFH’s operating performance will remain at a strong level, underpinned mainly by modest premium growth, continued favorable claims experience, and an expense ratio that should remain stable over time.
Negative rating actions could occur if LFH’s risk-adjusted capitalization deteriorates significantly as a result of adverse operating performance, or if there is significant deterioration in the company’s business profile, for example, a sharp market share drop due to weaker distribution support from its bank shareholders.
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 A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and
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