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FOR IMMEDIATE RELEASE
HONG KONG - AUGUST 16, 2016 11:38 AM (EDT)
A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of China BOCOM Insurance Company Limited (CBIC) (Hong Kong). The outlook for each rating is stable.
The rating affirmations reflect CBIC’s strong risk-adjusted capitalization, favorable operating performance and the support it has received as a wholly owned subsidiary of Bank of Communications Co., Ltd. (BOCOM) since its inception in 2000.
As the sole non-life insurance arm of BOCOM, CBIC receives distribution support through BOCOM’s banking network in Hong Kong, in addition to investment management and managerial support through BOCOM’s various operating units. CBIC’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains strong due to its prudent underwriting practices, in conjunction with a gradual downsizing in recent years of riskier investment assets such as equities and non-investment grade bonds. Favorable operating performance over the past five years primarily was underpinned by a stable stream of investment income, while underwriting results also contributed positively, albeit on a relatively small scale.
Offsetting rating factors are CBIC’s consistently high expense ratio amid a small premium base and the challenge the company is facing in expanding its business portfolio under Hong Kong’s competitive pricing conditions.
Positive rating actions could occur if CBIC can demonstrate a significant improvement in its market position and if it can continuously maintain a stable operating performance. Negative rating actions could result from a material decline in CBIC’s risk-adjusted capitalization due to deterioration in its operating performance. Deterioration in BOCOM’s financial strength or if BOCOM provides a lower level of support also could lead to negative rating actions.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page.
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