HONG KONG’S TUGU INSURANCE CREDIT RATINGS AFFIRMED - AM BEST

KUALA LUMPUR, April 14 (Bernama) -- Global credit rating agency, AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Hong Kong’s Tugu Insurance Company Limited (TIC).

In a statement, AM Best said the outlook of these Credit Ratings (rating) is stable, reflecting TIC’s balance sheet strength, which AM Best assessed as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).

TIC’s strong balance sheet assessment is supported by its risk-adjusted capitalisation assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio.

The company’s capital and surplus has been volatile over the past five years, due to the combined effect of unsteady operating results and revaluation gains or losses arising from its concentrated investment properties.

AM Best viewed TIC’s operating performance as marginal in which the company has reported solid premium growth since 2021; nonetheless, it continued to record an elevated level of expense ratio due to its small premium base.

The company’s investment return has been relatively stable, supported by a stream of rental income from its investment properties, coupled with dividends from listed bonds and common shares, as well as interest income from cash and deposits.

Annual revaluation of investment properties, on the other hand, adds uncertainty to TIC’s net profits or losses, with AM Best expecting TIC’s overall profitability to remain thin over the short to medium term.

United States-headquartered AM Best assessed TIC’s business profile as limited. The company remains a small player in Hong Kong’s highly competitive and fragmented general insurance market.

The rating agency also viewed TIC’s ERM as marginal with underwriting, strategic planning and reserving activities have historically been areas in which the company’s risk management capabilities do not match its profile.

-- BERNAMA