AM Best affirms credit ratings of Hong Leong Insurance (Asia)

KUALA LUMPUR, Jan 9 (Bernama) -- AM Best has affirmed Hong Kong-based Hong Leong Insurance (Asia) Ltd (HLIA) financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent).

AM Best said in a statement the outlook of these credit ratings (ratings) is stable.

The ratings reflect HLIA’s balance sheet strength, which AM Best assessed as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

“The stable outlooks reflect AM Best’s expectation that HLIA’s underwriting performance will recover to the pre-COVID level over the short to intermediate term, and overall profitability will not be materially undermined by equity market volatility,” it said.

The insurance company overall profitability is mainly supported by its underwriting profits. Although its combined ratio remains significantly better than the industry average, it exhibits an increasing trend as the proportion of its lower profit margin business has increased over time.

The credit rating agency said HLIA’s risk-adjusted capitalisation remains at the strongest level as measured by Best’s Capital Adequacy Ratio, and it maintains a low underwriting leverage and an appropriate reinsurance programme backed by reinsurers of good credit quality.

“However, the company’s modest capital size, concentration risk in real estate holdings and moderate reinsurance dependency are partially offsetting factors,” it added.

While accident and health insurance continues to make up the largest portion of total net premiums, HLIA is expanding its commercial lines business, for instance, by tapping opportunities in the small- to medium-sized enterprise segment through local brokers and agents.

-- BERNAMA