AM Best Affirms Credit Ratings of Peak Reinsurance Company Limited and Its Subsidiaries

Business Wire

HONG KONG--(BUSINESS WIRE)--
AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” (Excellent) of Peak Reinsurance Company Limited (Peak Re) (Hong Kong) and its subsidiaries, Peak Reinsurance AG (Switzerland) and Peak Reinsurance North America Ltd. (Bermuda). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Peak Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also factor in the neutral impact from Peak Re’s parent company, Fosun International Limited (Fosun).

Peak Re’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), is projected to remain at the strongest level over the short to intermediate term. Under IFRS 17 and IFRS 9 accounting basis, the company’s capital and surplus increased by 11.7% to USD 1.43 billion in 2024, mainly supported by favourable underwriting and investment performance during the year. Peak Re has demonstrated a good level of financial agility in accessing traditional and alternative capital markets. On 29 April 2025, the company successfully sponsored the issuance of its second catastrophe bond securing USD 50 million via Black Kite Re Limited (Series 2025-1), covering natural perils in Japan, China and India. Other supportive factors of the balance sheet strength include the overall prudent investment risk profile, comprehensive retrocession programme and strong liquidity.

Under IFRS 17 and IFRS 9 accounting basis, Peak Re achieved a net profit of USD 187 million in 2024 and remained profitable in the first half of 2025, supported by favourable reinsurance service results and investment performance. The IFRS 17 non-life combined ratio further improved in 2024, buoyed by a better claims experience. The life reinsurance business has achieved solid growth over the past few years and continues to offer business and capital diversification. A stable stream of interest income from debt instruments, combined with dividends from listed equities and distributions from fund investments, continues to form the backbone of Peak Re’s investment return. Additionally, during the financial year 2024, the company increased the allocation to fixed income while rebalanced its equities book to highly liquid and diversified portfolio with predominantly fund exposure and low single name concentration. The company continues to maintain a lean and efficient operational model.

Peak Re’s non-life portfolio is diversified by product lines and geography, with a focus on the Asia-Pacific region. The company continues to expand its traditional risk business in the life segment, with a focus on health products including medical and critical illness in China. Moreover, the company has been growing its market presence in offering structured reinsurance solutions to clients for capital efficiency purposes.

Fosun has demonstrated stabilised credit condition, while its reported financial leverage has been declining over the past few years and remained largely stable in 2024 as it continues to adjust its investment portfolio and manage its debt profile. In addition, Fosun has demonstrated access to funding and has received bank support to partially mitigate liquidity and refinancing risks. Overall, AM Best views Fosun is subject to a subdued likelihood of a potential adverse credit event, which may expose Peak Re to contagion risk over the short to intermediate term. Moreover, Peak Re has demonstrated a track record of effective mitigation of potential contagion risk stemming from Fosun’s weaker credit fundamentals and can maintain its own financial strength. The ring-fencing mechanism includes board composition, stringent related-party transaction policies, and regulatory oversight. On a standalone basis, AM Best expects Peak Re to maintain a robust level of risk-adjusted capitalisation while continuing to adopt disciplined underwriting and prudent investment strategies to strengthen its operating performance over the short to intermediate term.

Negative rating actions may occur if Fosun were to exhibit adverse financial distress or suffer from reputational risk, thereby giving rise to heightened contagion risk to Peak Re. Negative rating actions also may arise if there is an adverse and deteriorating trend in Peak Re’s operating results or if there is a material deterioration in its risk-adjusted capitalisation. While unlikely over the short to intermediate term under the current ownership structure, positive rating actions may occur if Peak Re demonstrates a sustained and robust level of risk-adjusted capitalisation with supportive operating profitability, while being exposed to a more subdued level of negative parental contagion risk.

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.