AM Best Affirms Credit Ratings of Hong Leong Insurance (Asia) 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-” of Hong Leong Insurance (Asia) Limited (HLIA) (Hong Kong). The outlook of these Credit Ratings (ratings) is stable.

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

HLIA’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 the past three years, HLIA’s underwriting and investment results have been consistently positive, contributing to combined ratios under 80% and operating ratios below 70%. The strong and consistent underwriting results are attributable mainly to the company being very selective in the type of business it chooses to underwrite and retain.

HLIA has good market positions in some niche segments within its domestic insurance market, primarily in travel insurance and domestic helper insurance. In addition, a significant portion of the company’s new business is sourced from direct marketing and the company’s online portal, both of which contribute to its lower commission cost structure. Nevertheless, HLIA’s small market share and narrow product offerings have constrained its business profile assessment.

The stable outlooks reflect AM Best’s expectation that HLIA will maintain underwriting results that outperform the industry composite, supported by steady revenue growth, a low acquisition cost structure and favorable claims experience for its core product lines.

Downward rating pressure could result if there is significant deterioration in HLIA’s risk-adjusted capitalization or financial performance. Additionally, the ratings may be downgraded if there is material deterioration in the credit profile of HLIA’s parent company, Hong Leong Financial Group Berhad.

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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.