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

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

HLIA’s very strong balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which was at the strongest level in fiscal year-end 30 June 2025 (FY 2025), as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s capital and surplus (C&S) increased organically, supported by favourable investment income and strong underwriting results, which were partially offset by the moderate dividend up streamed to the parent company. Other supporting factors include HLIA’s low underwriting leverage and healthy regulatory solvency ratio. HLIA’s modest C&S level, relatively high dependency on reinsurance and its investment concentration in real estate properties are considered offsetting factors when assessing its balance sheet strength.

AM Best views HLIA’s operating performance as strong, which is historically supported by its better-than-average underwriting profitability. In FY 2025, the company continued to report growth in its top line primarily driven by a recovery in property damage and general liabilities insurance segments. This year, the strong investment results also contributed to a significant portion of the company’s net profits, mainly driven by the favorable fair value gain of equity investments. Going forward, AM Best expects HLIA to benefit from improved operational efficiency with a more stable expense ratio and will continue to diversify its investment portfolio towards fixed-income type investments.

AM Best assesses HLIA’s business profile as limited. The company’s presence in Hong Kong’s general insurance market remains modest with a small market share. The company’s portfolio is skewed toward personal lines products, including domestic helper and travel insurance via direct channels, including its call centre. In recent years, HLIA has expanded its portfolio into commercial lines via the broker channel and is also exploring the potential in serving small to medium-sized businesses. Going forward, HLIA will continue to drive growth by cross-selling personal insurance to its existing client base and by digitizing underwriting and claims processes to elevate customer experience and boost retention.

Negative rating actions could occur if HLIA’s operating performance deviates materially from its business plan, for example, due to consistently material lower investment yields or a diminished underwriting margin. Negative rating actions also could arise if there is significant deterioration in the company’s risk-adjusted capitalisation. Although not likely in the short to medium term, positive rating actions could occur if HLIA achieves material improvement in its business profile; for example, a significant strengthening of its market position, while maintaining 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.