AM Best Revises Outlooks to Positive for CMB Wing Lung Insurance Company Limited

HONG KONG–(BUSINESS WIRE)–#insurance—AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of �a-” (Excellent) of CMB Wing Lung Insurance Company Limited (CMBWLI) (Hong Kong).

The Credit Ratings (ratings) reflect CMBWLI’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and marginal enterprise risk management.

The revised outlooks to positive from stable reflect CMBWLI’s improvement in investment risk control and governance, risk identification and monitoring tools, and risk quantification capability. AM Best expects the company’s risk management framework to become more developed and better aligned with market practices, partially driven by regulatory initiatives to strengthen risk oversight and reporting.

CMBWLI’s very strong balance sheet strength assessment is underpinned by its robust risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s capital continued to benefit from the positive operating results and full profit retention. Whilst CMBWLI maintains a conservative investment strategy in 2020 and continues to lower the proportion of unrated bonds, it plans to increase investments in equities significantly in coming years to enhance yields, whilst its BCAR over the forecast period is projected to stay at the strongest level.

CMBWLI’s operating performance remains favourable. Its underwriting performance continues to outperform its domestic peers, whist the positive investment performance is supported by interest, dividend and rental income. The company is no longer negatively affected by investment impairments in 2020.

CMBWLI is a medium-sized non-life insurer in Hong Kong. It ranked 26^th in Hong Kong’s general insurance market in terms of 2020 onshore gross premium written, whilst it remains to be one of the major market players in the Direct Employees’ Compensation class in Hong Kong. Its underwriting expertise has demonstrated a track record to sourcing business with better-than-average loss experience. The company maintains a relatively stable underwriting portfolio, which is skewed toward the general liability line of business and focuses on Hong Kong. The majority of the company’s business is sourced through agents and brokers, whilst the company continues to utilise its parent’s and affiliated bank’s distribution network, as well as the digital channel to distribute personal line products.

Positive rating actions could occur if CMBWLI continues to demonstrate improvement in enterprise-wide risk management, whilst maintaining robust risk-adjusted capitalisation and a favourable operating performance. Negative rating actions could occur if the company’s risk-adjusted capitalisation deteriorates materially due to adverse underwriting results or investment losses, or if the company’s business profile notably weakens.

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 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.

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Contacts

Ken Lau

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James Chan

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