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 CTIMs 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.
CTIMs risk-adjusted capitalisation, as measured by Bests Capital Adequacy Ratio (BCAR), remained stable and is at the strongest level as of year-end 2021. The companys capital level remained robust at the similar level in 2022, and its investment strategy remained conservative and stable, with the majority of its investment assets in cash and investment grade bonds. The companys reinsurance program remained comprehensive with reinsurer panels of good credit quality; notwithstanding, the reinsurance dependency of the company is moderate.
CTIM delivered a five-year average return on equity of 18.7% during 2017 to 2021, based on audited financials. The company continues to be profit generating in 2022, supported by positive underwriting results, and partially offset by unfavorable investment results. The companys net combined ratio improved to 71% in 2022 from 82% in 2021, while the ratio is expected to normalize as the local economy recovers from the COVID-19 pandemic. On the other hand, the net expense ratio exhibits an increasing trend, attributed to growing management expenses spent on IT systems. The companys investment results turned negative in 2022 due to market volatility but are expected to continue to support the companys overall operating performance through stable streams of interest, dividend and rental income in the future.
CTIM maintains a long track record as the leader in Macaus non-life insurance segment and has a market share of close to 34% in 2022 based on gross premium written. The companys underwriting portfolio and distribution channel were stable and diversified, while the company continues to develop its online channel and explore cross-selling opportunities in its affiliated life insurance company in Macau, China Taiping Life Insurance (Macau) Company Limited.
CTIM is well-positioned at its current rating level. Negative rating actions could occur if there is a material decline in the companys risk-adjusted capitalisation or a significant and sustained deteriorating trend in its operating performance. A weakening credit profile of the parent company, China Taiping Insurance Holdings Company Limited, also may have a negative impact on CTIMs ratings.
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 Bests 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 Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Bests Credit Ratings. For information on the proper use of Bests Credit Ratings, Bests Performance Assessments, Bests Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Bests 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.
Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
Contacts
Stephanie Mi
Financial Analyst
+852 2827 3402
stephanie.mi@ambest.com
James Chan
Director, Analytics
+852 2827 3418
james.chan@ambest.com
Christopher Sharkey
Associate Director, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Al Slavin
Senior Public Relations Specialist
+1 908 439 2200, ext. 5098
al.slavin@ambest.com
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