HONG KONG, March 28 (Bernama-BUSINESS WIRE) -- AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Sun Hung Kai Properties Insurance Limited (SHKPI) (Hong Kong). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect SHKPI’s 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.SHKPI’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), is maintained at the strongest level. The higher-risk assets, including non-investment-grade bonds and unlisted equities, and some sector concentration in the company investment portfolio exposed its risk-adjusted capitalisation to considerable market and credit risks. However, AM Best considers the company’s capital buffer is sufficient to absorb the associated investment risks. The company’s reinsurance programme remained appropriate, with reinsurer panels in good credit quality.
SHKPI’s overall operating performance has been consistently strong and above the market average. Supported by its parent in distribution with minimal gross acquisition expenses, SHKPI’s underwriting results continue to outperform industry peers. The company’s positive investment returns remain to be another profit driver, though its investment yield has been trending downward in recent years. The Chinese real estate sector liquidity crunch and recent equity market volatility may add short-term investment performance pressure on the company.
SHKPI is a wholly owned subsidiary of Sun Hung Kai Properties Limited, one of the largest property development and investment conglomerates in Hong Kong. It benefits from its parental network to write most of its business from associated and subsidiary companies. The company, therefore, continues to operate in a low acquisition cost business model. SHKPI maintains a small albeit profitable presence in Hong Kong’s general insurance market, focusing on employees’ compensation insurance.
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