Insurance

AM Best confirms credit ratings of The People’s Insurance Company of China (Hong Kong), Limited – InsuranceNewsNet

HONG KONG–(BUSINESS WIRE)–
AM Best Affirmed People’s Financial Strength Rating of A- (Excellent) and Issuer Long-Term Credit Rating of “a-” (Excellent) insurance company of China (hong kong), limited (PICC HK) (hong kong). The outlook for these Credit Ratings (ratings) is stable.

The ratings reflect the strength of PICC HK’s balance sheet, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate management of business risks. The ratings also reflect the company’s strategic importance to its parent company, The People’s insurance company (Group of china limited (PICC Group) (China), as the sole overseas insurance entity and a key component of the PICC Group’s overseas strategies.

PICC HK maintains a very strong overall balance sheet strength, supported by industry-leading risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR). The Company’s investment portfolio is diversified, with the majority of its assets spread among investment grade bonds, equities, cash and cash equivalents and funds.

PICC HK’s operating performance is deemed adequate with a five-year average cost income ratio of 97.2% and a five-year average return on equity of 4.3% (2017-2021), as calculated by AM Best. The company’s positive earnings are mainly driven by its investment income, supplemented by realized capital and foreign exchange gains in 2021. However, the shortage of cash in the Chinese real estate market in 2021 led to a decrease in fair value investments of PICC HK funds. The company’s technical results turned positive in 2021, mainly due to a lower gross commission ratio.

While maintaining its modest presence in the Hong Kong onshore insurance market, PICC HK has actively expanded its in-house reinsurance business in recent years. This strategy helped to diversify the company’s customer base, which was focused on the inter-company inbound reinsurance business of PICC Property and Casualty Company Limited. PICC HK has also set up an insurance broker at hong kong like its subsidiary, which obtained approval for a broker license in 2022. The new broker is expected to better coordinate cooperation within PICC Group and with other insurers in China and along the Belt and Road countries.

As the only foreign insurance entity of PICC Group, PICC HK plays a key role in the deployment of the group’s strategies internationally. The company benefits from the overall operational synergies across the group, particularly in the areas of underwriting, investment management and risk management. There is an explicit support history of PICC Group to PICC HK, as evidenced by multiple capital injections since the company was founded in 2002, the latest being a capital injection of 970 million HKD in December 2020.

Negative rating actions could occur if there is a decline in operational performance to a level that no longer supports adequate assessment of operational performance, or if the support that PICC HK receives from its parent company weakens. significantly or if the parent company’s credit fundamentals deteriorate significantly.

Ratings are communicated to rated entities before publication. Unless otherwise indicated, the ratings have not been changed as a result of this communication.

This press release relates to credit ratings that have been published on AM Best’s website. For all rating information relating to the publication and relevant disclosures, including office details responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Assessment Activity Web page. For more information on the use and limitations of credit rating opinions, please see Best Credit Score Guide. For more information on the proper use of Best’s Credit Ratings, Best’s Performance Ratings, Best’s Preliminary Credit Ratings, and AM Best’s press releases, please see Guide to Proper Use of Best’s Ratings and Reviews.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Based at United Statesthe company does business in more than 100 countries with regional offices in London, amsterdam, dubai, hong kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Ken Lau
Senior Financial Analyst

+852 2827 3426

[email protected]

Christopher Sharkey
Manager, Public Relations

+1 908 439 2200 ext. 5159

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James Chan
Associate Director

+852 2827 3418

[email protected]

Jeff Mango
General director,

Communications Strategy

+1 908 439 2200 ext. 5204

[email protected]t.com

Source: AM Best