KUALA LUMPUR, Dec 13 (Bernama) -- 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 (HK) Company Ltd [CTPI(HK)].
AM Best said in a statement that the credit ratings (ratings) which have a stable outlook reflect CTPI(HK)’s balance sheet strength, which was assessed as very strong as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
“It also incorporates the rating enhancement that CTPI(HK) receives from its parent, China Taiping Insurance Holdings Company Ltd (CTIH),” it said.
The rating agency said, CTPI(HK)’s very strong balance sheet strength is underpinned by its strongest level of risk-adjusted capitalisation as measured by Best’s capital adequacy ratio.
“The company’s capital and surplus (C&S) including minority interests increased by 1.2 per cent to HK$5.09 billion (RM2.90 billion) in 2021, mainly attributed to positive net investment returns.
“CTPI(HK)’s investment portfolio consists mostly of income-generating assets including investment property, bonds and unlisted fixed rate funds,” it added.
The unlisted fund investments accounted for 28 per cent of the company’s C&S in 2021, representing a high level of asset concentration risk. Following sizable impairment losses recognised in 2020 and 2021, the company liquidated two major unlisted funds with about half of the proceeds booked as receivables.
Going forward, AM Best expects the company to adopt a prudent investment strategy, and to exercise increased scrutiny in its risk selection, particularly for high-risk illiquid investments.
CTPI(HK) also continued to improve asset quality by lowering its non-investment grade bond holdings over the past few years.
The company is ranked fourth in Hong Kong’s non-life insurance segment in terms of gross premium written in 2021, with a market share of 4.3 per cent. Its product lines consisted mainly of health (A&H), fire, motor and general liability.
-- BERNAMA
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