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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 12, 2014 12:03 PM (EDT)
A.M. Best has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of "a-" of Luen Fung Hang Insurance Company Limited (LFH) (Macau). The outlook for both ratings is stable.
The ratings reflect LFH's excellent business profile, strong underwriting results and stable income from invested assets.
LFH enjoys an excellent business profile in Macau as a general insurance company co-owned by several banks and insurance companies with a Macau, Hong Kong or China background. The shareholders provide support to LFH in different areas, such as business distribution.
Benefiting from the good quality of business written through its bancassurance and direct channel, LFH has been able to deliver underwriting profits in a consistent manner. The high proportion of bonds in the investment portfolio also has yielded stable interest income for the company.
Partially offsetting these positive rating factors is the company's moderate exposure to a non-rated reinsurer, which carries more stringent capital requirements in Best's Capital Adequacy Ratio (BCAR).
Positive rating actions could occur as a result of LFH's continued surplus accumulation and an improved quality of its reinsurance panel. Negative rating actions may occur if risk-based capitalization deteriorates significantly as a result of underwriting losses, or there is a deviation from the capital management plan communicated to A.M. Best.
The methodology used in determining these interactive ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This rating announcement has been issued by A.M. Best Asia-Pacific Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.