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FOR IMMEDIATE RELEASE
HONG KONG - MARCH 09, 2017 04:48 PM (EST)
A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Sun Hung Kai Properties Insurance Limited (SHKPI) (Hong Kong). The outlook of these Credit Ratings (ratings) is stable.
The rating affirmations reflect the company’s strong risk-adjusted capitalization, with growth in capital and surplus supported by a consistently favorable operating performance. The company also benefits from the business and investment management support it receives as a wholly owned subsidiary and the sole insurance arm of Sun Hung Kai Properties Limited (SHKP), one of the leading property conglomerates based in Hong Kong.
SHKPI generates profits in its underwriting business, mainly from SHKP-related construction projects and operations, which carry low acquisition costs. The company is able to derive favorable commission income by ceding a material amount of premium to reinsurers. Its investment portfolio is managed by SHKP’s investment arm, which in recent years has achieved positive returns under different phases of the investment cycle.
Offsetting rating factors include the challenge that SHKPI faces in maintaining its current level of underwriting performance due to an expected increase in claims and decrease in premium income, as well as increased credit risk because of greater investments in subordinated fixed income and private issues over the past two years, although most of the issuers selected are financially sound.
Positive rating actions are unlikely in the near term. Negative rating actions could occur if the company experiences material and continual deterioration in its risk-adjusted capitalization, or exhibits an unfavorable trend in operating performance.
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 Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.