AM Best Affirms Credit Ratings of China Taiping Insurance (Macau) Company Limited

Business Wire

HONG KONG--(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 Taiping Insurance (Macau) Company Limited (CTIM) (Macau). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect CTIM’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

CTIM’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), remained at the strongest level as of year-end 2023. Based on the unaudited financial statements, the company’s capital level remained robust and further strengthened to MOP 964 million (USD 120 million) at year-end 2024. The company’s investment strategy is consistently conservative, with the majority of its assets held in cash and investment grade bonds. CTIM’s reinsurance programme remains comprehensive with reinsurer panels of good credit quality; although, the reinsurance dependency of the company is moderate.

CTIM reported a five-year average return-on-equity ratio (ROE) of 18.4% from 2019 to 2023. The company achieved an ROE of 19.8% in 2024, with a historical full year recorded net profit. In 2024, the net combined ratio increased moderately, mainly driven by an uptick in the loss ratio from motor business, while the net expense ratio stayed largely at a similar level as the prior year, thanks to the effective control of management expenses. The company has reported stable net investment returns (including gains) at mid-single digit level over the last two years, driven by improved capital market performance. CTIM’s investment performance is expected to continue to support its overall operating performance through stable streams of interest, dividend and rental incomes in the future.

CTIM maintains a long track record as the leader in Macau’s non-life insurance segment and has a market share of approximately 33% as of third-quarter 2024, based on gross premiums written. CTIM’s underwriting portfolio and distribution channels remain diversified, while the company continues to develop its online channel and explore cross-selling opportunities in its affiliated life insurance company, China Taiping Life Insurance (Macau) Company Limited, in Macau.

CTIM is well-positioned at its current rating level. Negative rating actions could occur if there is a significant and sustained trend of deterioration in its operating performance. A weakening credit profile of the parent company, China Taiping Insurance Holdings Company Limited (CTIH), also may have a negative impact on CTIM’s ratings. Although unlikely in the near term, positive rating actions could occur under the premise of an enhancement in the credit fundamentals of CTIH, and concurrently, if there is a material and sustained improvement in CTIM’s risk-adjusted capitalisation while the company maintains its strong operating performance.

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.