AM BEST REMOVES FROM UNDER REVIEW WITH POSITIVE IMPLICATIONS, UPGRADES CMBWLI CREDIT RATINGS

KUALA LUMPUR, April 7 (Bernama) -- United States-headquartered AM Best has removed from under review with positive implications and upgraded the credit ratings of Hong Kong’s CMB Wing Lung Insurance Company Limited (CMBWLI).

In a statement, AM Best said CMBWLI’s Financial Strength Rating was upgraded to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to “a” (Excellent) from “a-” (Excellent). The outlook assigned to these credit ratings (ratings) is stable.

The ratings of CMBWLI were placed under review with positive implications in October 2022, following an announcement on Sept 28, 2022 by China Merchants Bank Co Ltd (CMB) that CMBWLI would acquire the general insurance business of China Merchants Insurance Company Limited (CMI).

According to the business transfer agreement, CMI would transfer its general insurance business (including assets and liabilities related to the business) to CMBWLI, which would then issue 9,856,066 of its shares to CMI.

Subsequently, CMI will distribute all of its shares in CMBWLI to China Merchants Insurance Holdings (CMIH) and apply to the Hong Kong Insurance Authority (IA) to withdraw its authorisation to carry on general insurance business.

In addition, CMIH entered into a share subscription agreement with CMBWLI on Sept 28, 2022, to acquire 25,590,806 of CMBWLI’s new shares at a cash amount of HK$1,171 million. (HK$100=RM56.07)

Upon completion of the above transactions, CMIH will become the majority shareholder of CMBWLI by directly holding 55 per cent of its enlarged share capital, while CMB will indirectly own the remaining 45 per cent of the shares.

The ultimate parent of CMBWLI will change to China Merchants Group Limited (CMG) from CMB. The aforementioned change in shareholders has been approved by IA and the capital injection will take place in the foreseeable future.

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

CMBWLI’s overall operating performance has been consistently strong and better than average. Its five-year average return on equity was 7.6 per cent (2017–2021).

As a medium-size, non-life insurer in Hong Kong, and one of the major market players in its domestic market’s employees’ compensation segment, CMBWLI continues to demonstrate its capability to acquire insurance business with better-than-average loss experience.

-- BERNAMA