AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of a- of Hong Leong Insurance (Asia) Limited (HLIA) (Hong Kong). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect HLIAs balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
HLIAs very strong balance sheet assessment mainly reflects its capital size and low underwriting leverage. Given the volume of risks that the company writes and retains, the capital required to support its book of business is relatively modest, which supports its risk-adjusted capitalization being at the strongest level.
Both underwriting and investment results have been consistently positive, contributing to combined ratios of under 80% and operating ratios of below 70% over the past three years. The strong and consistent underwriting results are attributable mainly to the company being very selective in the type of business it chooses to underwrite and retain. For instance, in recent years, it has reduced its exposure to workers compensation and continued to stay away from highly competitive product lines, such as motor insurance.
HLIA has good market positions in some niche segments within its domestic insurance market, primarily in travel insurance and domestic helper insurance. In addition, a significant portion of the companys new business is now sourced from direct marketing and the companys online portal, both of which contribute to its lower commission cost structure. Nevertheless, HLIAs small market share and narrow product offerings have constrained its business profile assessment.
WANT TO BUILD A FINANCIAL EMPIRE?
Subscribe to the Global Banking & Finance Review Newsletter for FREE Get Access to Exclusive Reports to Save Time & Money
By using this form you agree with the storage and handling of your data by this website. We Will Not Spam, Rent, or Sell Your Information.
The stable outlooks reflect AM Bests expectation that HLIA will maintain underwriting results that outperform the industry composite, supported by steady revenue growth, a low acquisition cost structure and favorable claims experience for its core product lines.
Downward rating pressure could result if there is significant deterioration in its risk-adjusted capitalization or financial performance. Additionally, the ratings may be downgraded if there is material deterioration in the credit profile of HLIAs parent company, Hong Leong Financial Group Berhad.
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 Understanding Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.
Copyright 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
Associate Director, Analytics
Manager, Public Relations
908 439 2200, ext. 5159
Director, Public Relations
439 2200, ext. 5644