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Best’s News & Research Service - December 06, 2019 12:41 PM (EST)

AM Best Affirms Credit Ratings of Qianhai Reinsurance Co., Ltd.

  • December 06, 2019 12:41 PM (EST)
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Hong Kong //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Qianhai Reinsurance Co., Ltd. (QHR) (China). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect QHR’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

QHR’s very strong balance sheet strength is supported by its conservative underwriting leverage and retrocession program, as well as financial flexibility owing to support from its shareholders and risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Consistent with its business plan, QHR is on track to generate its first year of net profit in fiscal-year 2019, the company’s third year of operation. QHR expects to maintain profitable operations and exercise full profit retention over the medium term, while gradually growing its profit size and margin each year.

Founded in December 2016 with an initial capitalization of RMB 3 billion (USD 426 million), QHR is a composite reinsurer controlled by three Chinese state-owned enterprises, and plays a strategic role in the development of the Qianhai Free Trade Zone. In 2019, the company made efforts to diversify its non-life reinsurance portfolio outside of China while continuing to underwrite mainly proportional treaty business. In the life reinsurance segment, QHR offers traditional life protection and health reinsurance products, as well as savings reinsurance and capital management solutions in the form of financial reinsurance. As a startup reinsurer, QHR faces pricing and reserving risks due to its lack of operating history, as well as execution risk in achieving its business plan. The company also is exposed to investment risk, as a material portion of its investment portfolio is invested in higher-risk assets, including equities and debt-type alternative investments with lower levels of transparency and liquidity. As a result, the company has experienced relatively volatile investment performance over the past three years.

While positive rating actions are unlikely to occur in the near term, negative rating actions could occur if QHR materially deviates from its business plan, if its liquidity or risk-adjusted capitalization diverges significantly from AM Best’s expectations or if there is a reduced level of commitment from the company’s three strategic shareholders.

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 AM 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 AM 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. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.



Reinsurance Financial Strength Press Release Asia China Insurance Issuer Credit Rating Best's Credit Rating Action


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