AM BEST AFFIRMS "A" RATING FOR HONG KONG'S CMB WING LUNG INSURANCE

KUALA LUMPUR, April 4 (Bernama) -- Global credit rating agency, AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent) for Hong Kong’s CMB Wing Lung Insurance Company Ltd (CMBWLI), with a stable outlook.

In a statement, AM Best said these credit ratings (ratings) reflected CMBWLI’s very strong balance sheet strength, which was assessed as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

The company’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, remains robust. Following a business transfer from China Merchants Insurance Company Ltd in December 2022 and a significant capital injection from China Merchants Insurance Holdings Company Ltd in June 2023, its capital and surplus (C&S) surged to HK$3.1 billion as of end-2023. (HK$100 = RM56.87)

CMBWLI’s C&S continued to grow in 2024, supported by positive operating results and partial profit retention. The insurer maintains a prudent investment strategy, with cash and cash equivalents as its largest asset class, while enhancing the credit quality of its bond investments and limiting exposure to high-risk assets.

Its operating performance remains strong, outperforming the market, with high single-digit returns on equity recorded in 2023 and 2024. Net earnings are bolstered by profitable underwriting results and stable investment income, which will improve further in 2024 due to favourable interest rates.

As a medium-sized non-life insurer in Hong Kong, CMBWLI is a key player in the employees’ compensation (EC) segment. Its business portfolio remains diversified, comprising EC, motor, and property damage insurance, with growth prospects in the marine segment and inward property damage outside Hong Kong.

AM Best noted that negative rating actions could be triggered by a sustained decline in operating performance due to underwriting losses or investment setbacks or a significant deterioration in risk-adjusted capitalisation.

Conversely, a material and sustained improvement in capitalisation, along with continued strong performance, could lead to a positive rating action.

-- BERNAMA