AM Best Assigns Credit Ratings to Beibu Gulf Property & Casualty Insurance Company Ltd.

Business Wire

HONG KONG--(BUSINESS WIRE)-- AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” (Good) to Beibu Gulf Property & Casualty Insurance Company Ltd. (Beibu Gulf Insurance) (China). The outlook assigned to these Credit Ratings (ratings) is stable.

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

Established in 2013, Beibu Gulf Insurance is a non-life insurance company headquartered in Guangxi province, China. It was founded through a joint partnership comprising of 10 state-owned enterprise shareholders and three private sector investors. Its ultimate controlling shareholder, Guangxi Investment Group Co., Ltd., a provincial-level state-owned capital investment company in Guangxi, holds a 29.73% equity stake through its subsidiaries.

Despite being a small-to-medium sized non-life insurer in China, Beibu Gulf Insurance holds a prominent position in Guangxi province, capturing 9% of local market share, in terms of premium income in 2025. The company maintains a diversified product mix, with motor insurance making up nearly half of its gross written premiums. Leveraging strong relationships between its shareholders and local governments, Beibu Gulf Insurance gains access to business opportunities in policy driven agricultural insurance and has continued to expand its liability lines in recent years. While its risk profile is concentrated in certain geographical areas, this risk is partially mitigated by approximately one-quarter of its business originating outside of Guangxi, namely Guangdong (including Shenzhen), Sichuan and Guizhou province.

Beibu Gulf Insurance’s strong balance sheet strength assessment is underpinned by its strongest level of risk-adjusted capitalisation as at year-end 2025, as measured by Best’s Capital Adequacy Ratio (BCAR), which is supported by organic capital accumulation and controlled expansion in underwriting and investment risks. Nevertheless, the company’s absolute capital size remains modest with a relatively high underwriting leverage. Beibu Gulf Insurance demonstrated its financial flexibility by successfully issuing capital supplementary bonds (CSB). Adjusted financial leverage, including equity credit for CSB, was positive at 17.4% despite a low interest coverage ratio in 2025. An offsetting factor is its highly dispersed shareholding structure, which may be subject to further changes; as such, the execution of the company's future capital plans may introduce uncertainty to the fundamentals of its balance sheet strength.

After posting two years of net loss, Beibu Gulf Insurance turned around to profitability in 2023, and sustained momentum to deliver mid-single-digit return-on-equity across both 2024 and 2025. Although Beibu Gulf Insurance has been recording underwriting losses since its establishment, it has achieved narrowing loss trend in recent years from the management’s effort of portfolio restructuring. The company maintains a well-diversified and liquid investment book, dominated by bonds, fixed-income wealth management instruments and cash. The investment portfolio generated a low-single-digit investment return, which was above the average level of the domestic non-life industry in 2025.

Negative rating actions could occur if there is a material decline in Beibu Gulf Insurance’s balance sheet strength fundamentals. A sustained deteriorating trend in underwriting and/or operating performance also may result in negative rating actions. Positive rating actions could occur if the company has a material improvement in balance sheet strength fundamentals while maintaining positive 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.